Friday, December 9, 2022

Podcasts Review Services Sales Tax, Tips for Managing Dress Codes in Summer

The Workplace podcast presented by the California Chamber of Commerce provides expert and entertaining commentary on issues critical to California employers and employees.

The 20 episodes posted since the first podcast aired in March have covered topics ranging from preventing sexual harassment in the workplace to independent contractors, 2020 presidential politics and privacy.

Recent podcasts have examined a proposal to institute a tax on services, and summertime work wear.

To listen or subscribe to the podcasts, visit www.calchamber.com/theworkplace.


The Workplace

Renewed Talk of Sales Tax on Services Raises Concerns for Business

Governor Gavin Newsom signed the state budget with a $21 billion surplus, but expressed his support for a new sales tax on services in California. Although details are sparse, any new tax on services would affect not just businesses, but consumers, who already pay a sales tax.

In Episode 19 of The Workplace podcast, CalChamber President and CEO Allan Zaremberg is joined by Loren Kaye, president of the California Foundation for Commerce and Education, to discuss the proposed sales tax on services and the changes it would bring to California’s budget and economy.

What a Sales Tax on Services Would Look Like

The sales tax on services, as envisioned by its proponent, Senator Bob Hertzberg (D-Van Nuys), is aimed at businesses in California, but that doesn’t mean it won’t also affect consumers.

“The latest proposal…is to charge a services tax just on business-to-business services, but don’t think that that doesn’t mean that consumers won’t pay,” Kaye tells Zaremberg. “Consumers will pay because to the extent businesses pay higher sales taxes on services, they’ll pass it on to consumers.”

Furthermore, if consumers purchase anything that requires multiple services, they will pay even more as these taxes add up.

“We’ve estimated, in fact, that the sales tax on services at just a 5 percent level… would increase the [price of an] average house in California by $16,000,” says Kaye.

In some cities in California where local add-on taxes supplement the state rate, the tax would raise even more money. Currently, the sales tax in Los Angeles is 9.5%, meaning if the proposed sales tax on services were to pass, the tax in Los Angeles County would go up greatly.

If the sales tax on services passed, small businesses would be hit hardest. Large corporations will have the resources and ability to bring services work in-house; however, smaller companies may have no choice but to continue hiring help from the outside.

Why the Tax Is Being Proposed

With such a large budget surplus, many Californians are wondering why more taxes are being proposed. The sales tax on services has been proposed to help mitigate budget volatility, which in actuality is a consequence of the state’s high income tax.

California has the highest income tax rate in the nation. The state’s multibillion-dollar budget surplus is due to the high income tax rates, mostly attributable to the earnings of the top 1% of the state’s population. Because much of these earnings are from capital gains, they are very sensitive to economic conditions, which in turn creates the state’s notorious budget volatility.

“You can’t have enormous revenue gains when the stock market is good without having the threat of big dips when we hit a recession,” adds Kaye. “If you want to solve the volatility, you’ve got to give up the big revenue bumps.”

Although a sales tax on services has been proposed before, it has never been introduced into the Legislature while the state had a huge budget surplus.

“This is going to hit everybody,” says Kaye. “It is going to hit big businesses, consulting services, small businesses. Anybody that hires a contractor, a consultant, any sort of a service business is going to be affected.”

Employers can find more information on the proposed sales tax on business services by visiting the Business Issues and Legislative Guide article on the CalChamber website or checking out the California Foundation for Commerce and Education report on the effects of the tax at cfcepolicy.org.


The Workplace

What Not to Wear — to Work

It’s summertime in California and that means flip flops, shorts, and tank tops. Unfortunately, when the weather heats up, employees can be tempted to show up for work wearing attire that seems more appropriate for the beach than the office.

In Episode 18 of The Workplace, CalChamber Executive Vice President and General Counsel Erika Frank is joined by employment law expert Jennifer Shaw to discuss what steps employers can take to ensure that employees are appropriately dressed and groomed for their work environment. The two share some humorous anecdotes about enforcing a dress code at work.

Employees Should Dress for What They Do

What people wear to work can affect productivity and the image of a company. Enforcing a written dress code can be difficult if employers focus too much on the details.

Shaw recommends thinking about the focus of your business when establishing a dress code. For example, if employees work in an office environment, attire would be different than for employees who work outside.

“Part of it is not judging, but being able to step back and say ‘OK, what is this person supposed to do all day?’” says Shaw.

Also, it is important to remember that the dress code in every workplace will vary based on the expectations of the employees.

Rather than having an in-depth description of how employees should dress, such as wearing pantyhose, specifying how many inches a skirt should be from the knees or how an employee should style his/her hair, Shaw says, “the dress code should be: dress appropriately for your position.”

During the discussion, Frank stresses that just because someone may be wearing something that you may not wear, it does not mean the attire is inappropriate. Employers should ask themselves whether they are judging someone because the person is not fitting a “mold” or because the individual is dressed inappropriately, Frank says.

When an employee is dressed inappropriately, it is crucial for employers to speak up.

“If you don’t say something, you are creating a problem for your other employees,” Shaw tells Frank.

Talking to employees when they are dressing inappropriately ensures the workplace is a safe and comfortable environment for everyone.

Religious, Cultural Considerations

Sometimes there are cultural or religious reasons behind attire. In California, there are religious and grooming protection laws that employers should be aware of, Frank says.

For example, Abercrombie & Fitch fell into legal trouble years ago for refusing to hire a woman who wore a headscarf because the look was not “true to their brand.”

“Any time we are talking about ‘fitting in,’ or saying something ‘is or is not brand sensitive,’ the hair on the back of my neck stands up,” Shaw says. “A lot of times those are buzzwords for ‘I just don’t like what’s going on.’”

Times Change How We Dress

As fashions come and go, employees may want to dress in a more contemporary style, and it is important for employers to be flexible. Tattoos are an especially difficult part of the dress code. As they become increasingly popular, it is hard for employers to ban tattoos altogether.

“We have to think about, ‘what is the substance of the tattoo?’” says Shaw. “We can’t be content specific. What it is really about is what is the picture? What are we looking at?”

When it comes to the substance of the tattoo, employers should think about whether the image would be offensive if it were hung on the wall, Shaw recommends.

“It’s the gray area that gets really tricky, and I know that a lot of employers will have blanket policies that require tattoos to be covered up,” adds Frank.

In addition to tattoos, people have begun dressing more casually in the workplace. The fallout of this, says Shaw, is that behavior has also become more relaxed.

“Studies have shown when we dress down, our behavior also comes down,” says Shaw.

Overall, it is crucial for employees to consider wearing attire that is consistent with their work responsibilities.

Subscribe to The Workplace

Subscribe to The Workplace on iTunes, Google Play, Stitcher, PodBean and Tune In. New episodes will be released each Wednesday.

To listen or subscribe, visit www.calchamber.com/theworkplace.

CalChamber
CalChamber
The California Chamber of Commerce is the largest, broad-based business advocate to government in California, working at the state and federal levels to influence government actions affecting all California business. As a not-for-profit, we leverage our front-line knowledge of laws and regulations to provide affordable and easy-to-use compliance products and services.

Related Articles

Best Practices for Fostering Diversity and Inclusion in the Workplace

In Episode 165 of The Workplace podcast, CalChamber employment law expert Matthew Roberts, and diversity and inclusion consultant Jonathan Mayes discuss best practices for fostering diversity, equity, inclusion and belonging in the workplace. The shift...

Recruiting Best Practices for a Post-COVID-19 Job Landscape

In Episode 164 of The Workplace podcast, CalChamber employment law expert Matthew Roberts and best-selling author and recruiting expert Rikka Brandon discuss hiring best practices in a post-COVID-19 pandemic job landscape. Today’s job landscape is...

Trending Topics on the Labor Law Helpline: Listening to Music and More

In Episode 162 of The Workplace podcast, CalChamber employment law expert Matthew Roberts and CalChamber HR Adviser Ellen Savage discuss the issues employers are asking about most often on the CalChamber Labor Law Helpline,...