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Solo 401(k)s in 2020: What Every Gig Worker Needs to Know | Smart Change: Personal Finance

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Where the big difference comes in is when you consider employer contributions. A solo 401(k) lets you make employer contributions of up to 20% of your net earnings from self-employment. Net earnings for these purposes means the net income from your independent contractor business after accounting for allowed deductible expenses, reduced by half of the self-employment taxes you have to pay on your income.

There’s a much higher limit on total contributions — employee plus employer — that you’re allowed to make to a solo 401(k). For 2020, that limit is $57,000 for those under 50, or $63,000 for those 50 or older. But because the employer portion is limited by income, you generally have to have a very high level of earnings in order to qualify to make the maximum contribution.

Is a solo 401(k) worth it?

Opening a solo 401(k) does come with a cost. You’ll formally have to take on the responsibility of being a retirement plan administrator, keeping the necessary documentation and filing the necessary tax forms that come with it. If you don’t, the IRS can come back and challenge the tax-deferred status of your solo 401(k). Most of the financial institutions that offer solo 401(k)s will help you out with the required paperwork, but that can sometimes come with added fees.

However, many people like solo 401(k)s because they tend to offer much more flexible investment options than a regular employer’s 401(k) retirement plan. Rather than having to settle for mutual funds, many solo 401(k) providers offer full brokerage accounts that let you invest in stocks, bonds, ETFs, and many other types of investments.

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DoorDash, Postmates Pay More Than $350,000 to Seattle Gig Workers Due to Hazard Pay Law

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The enforcement of a new Seattle law designed to offer gig workers hazard pay during the pandemic seems to be paying off. As announced late last week by the Seattle Office of Labor Standards (OLS), delivery companies DoorDash and Postmates have doled out more than $350,000 in restitution to drivers after Seattle’s hazard pay mandate went into effect this summer. DoorDash paid $111,435 to 2,998 workers in Seattle, while Postmates paid $250,515 to 2,975 workers.

In June, Seattle lawmakers passed a piece of legislation known as the “premium pay” bill intended to help gig workers receive extra money as economic protection during the COVID-19 pandemic. In what’s essentially hazard pay, drivers for food app delivery services such as DoorDash, Postmates, and Grubhub are supposed to get an extra $2.50 per order in addition to their usual pay. The bill requires companies to give these workers the extra money until the end of the city’s civil emergency, and penalties for noncompliance can range up to $546.07 per “aggrieved party” for a first offense, with that max going up on subsequent offenses.

In the case of the recent financial restitution from DoorDash and Postmates, the payments were not penalties or fines, but rather part of an agreement made between OLS and the two companies after drivers gave the Seattle department a heads-up about possible noncompliance with the newly enacted mandate.

“After receiving calls from gig workers, OLS contacted the companies, informing them that if the companies resolved issues regarding premium pay and paid workers back pay and interest by a certain date, OLS would forego a formal investigation,” OLS communications manager Cynthia Santana tells Eater Seattle. “Both companies complied, conducted an internal audit, which identified various problems, and promptly paid the workers back pay and interest. We received proof of compliance from both hiring entities.”

Third-party companies pushed back aggressively against Seattle’s hazard pay bill. The extra pay per delivery was intended to be $5, not $2.50, and would have included ride hailing services such as Uber and Lyft. But the number was reduced after negotiations among city lawmakers, third-party delivery services, and the labor organization Working Washington. Ride hailing apps were excluded because Mayor Jenny Durkan is currently working with those companies on more permanent pay minimums.

In a statement back in June, a rep for DoorDash said the Seattle law would “reduce earning opportunities [for drivers] and hurt restaurants at the worst possible time.” Around the same time, Instacart had threatened to abandon the Seattle market if the hazard pay bill passed (three months later, the app is still available here).

Eater Seattle reached out to both DoorDash and Postmates for comment on the recent payments and internal audit, but did not hear back before this article was published.



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Eviction startup gets gig workers to help landlords kick people out

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  • A new startup is recruiting gig workers to help landlords evict people who can’t afford to pay rent during the COVID-19 pandemic.
  • Civvl, which Motherboard described as “Uber, but for evicting people,” has posted job listings across the US that encourage gig workers to join the app and work as eviction crew members.
  • Civvl notes that landlords are looking to hire workers to evict tenants who can’t afford to pay rent, advertising the gig as the “FASTEST GROWING MONEY MAKING GIG DUE TO COVID-19.”
  • The CDC is imposing a moratorium on all evictions across the US, but Civvl’s terms appear to pass on responsibility to landlords to ensure that evictions carried out through the startup are legal.
  • Visit Business Insider’s homepage for more stories.

Millions of Americans have fallen behind on rent amid economic turmoil caused by the COVID-19 pandemic, and many could face evictions.

One startup is treating the dire situation as a moneymaking opportunity for gig workers.

The company, Civvl, is recruiting freelancers to sign up as eviction crews for landlords, calling it the “FASTEST GROWING MONEY MAKING GIG DUE TO COVID-19.”

Civvl has posted job listings across the US aiming to recruit an army of gig workers to help facilitate evictions, as first reported by Vice’s Motherboard, which describes the startup as “Uber, but for evicting people.”

Civvl’s site is adorned with photos of homes being cleaned out by movers and messages advertising a quick and easy moneymaking opportunity for workers in the precarious gig economy.

“Too many people stopped paying rent and mortgages thinking they would not be evicted,” Civvl’s site reads. “Plenty of foreclosures and eviction properties to secure and clean out.”

People across the US are still struggling to complete their housing payments from month to month. As of the first week of September, 29% of Americans were unable to pay their rent or mortgage payment in full, and 8% did not pay their full rent in August, according to a survey by Apartment List, an online rental platform.

The CDC has ordered a moratorium on evictions amid COVID-19, which make it illegal for landlords to force out tenants who can’t afford rent during the pandemic — but many landlords are still pursuing evictions.

It’s not clear how Civvl ensures that evictions coordinated through the app are legal, but its terms of service shifts the legal liability to landlords who use the app.

Civvl appears to be a relatively new company, and its social-media pages were all created in May. It’s owned by OnQall, a catchall platform for hiring gig workers.

In an emailed statement to Business Insider, Civvl said the Motherboard article “is completely wrong and without merit,” but did not specify the inaccuracies.

“Civvl is just a tool for frustrated property owners to find on-demand help to clean out their already vacated properties. Nothing more. Nothing less. We are accumulating a growing database of independent contractors looking to carry out this foreseeable future of upcoming events,” the company said in the email.

But Civvl’s own website advertises roles beyond cleaning out vacating houses. One page encourages gig workers to “become a process server,” with job duties including “serve papers” and “post notices” on behalf of landlords.

Civvl



Civvl/Screenshot by Business Insider


Motherboard reported that several aspects of Civvl’s marketing might be misleading. The startup’s website previously included a quote that was attributed to the New York Times — but a search of the Times’ archive didn’t return any articles that included the quote, according to Motherboard, and Civvl deleted the attribution from its website after Motherboard reached out for comment.

In several one-star reviews on Civvl’s App Store listing, people said they had to pay a $35 registration fee to sign up and that work was not immediately available through the app.

In response to the report, several people took to social media to slam Civvl, voicing outrage that the startup appears to be aiming to profit from widespread evictions.



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Philadelphia Pandemic Laws Require Additional Paid Leave for Employees and Gig Workers, Other Pay and Benefits for Healthcare Workers

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On September 17, 2020, Philadelphia, Pennsylvania Mayor Phil Kenney signed File Number 200303, an amendment to the city’s generally applicable paid sick and safe time law, the Promoting Healthy Families and Workplaces Ordinance (PHFWO). The amendment requires new public health emergency leave (PHEL) for employees, gig workers, and others who do not receive leave under the federal Families First Coronavirus Response Act (FFCRA). The emergency leave requirements take effect immediately, but generally will expire on December 31, 2020. Additionally, on September 9, 2020, the mayor signed File Number 200306, which took effect immediately and permanently amends the PHFWO by adding a new statute requiring compensation and medical care or reimbursement for certain healthcare employees who contract a disease during a declared pandemic or epidemic.

                             Public Health Emergency Leave

What Qualifies as a Public Health Emergency: A public health emergency (PHE) is an emergency related to a public health threat, risk, disaster or emergency that affects Philadelphia that is made or issued by a federal, state or local official. How long a PHE remains in effect will depend on the start-end dates the declaration or proclamation uses, or when an official terminates the declaration or proclamation.

Covered Employers & Employees: The law not only applies to an “employer,” but also to a “hiring entity.” Under the law, covered workers are employees and individuals who perform at least 40 hours of work in Philadelphia in a year for one or more hiring entities, including the following individuals: various domestic workers; individuals providing services under the participant-directed and agency homecare model; individuals who work for food delivery networks, including drivers; individuals who work for transportation network companies, including drivers; certain health care professionals.

Notably, the law presumes an individual performing work for a hiring entity is an employee, unless the hiring entity demonstrates all the following conditions are met: A) The individual is free from the hiring entity’s control and direction in connection with the performance of the labor or services, under the contract and in fact; B) The individual performs labor or services that are outside the hiring entity’s usual course of business; and C) The individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the labor or services performed.

For hiring entities with unionized workforces, any or all of the law’s requirements may be waived via collective bargaining agreement (CBA) that is in effect. The waiver must be clear, unmistakable, and in the CBA, and the CBA must provide a comparable paid leave benefit.

Amount of Leave: A hiring entity must provide public health emergency leave when a public health emergency is declared or proclaimed, or on the covered individual’s hiring date during a public health emergency.

Individuals who work 40 hours or more per week receive 80 hours or an amount of leave equal to their average hours worked over a 14-day period (see below), whichever is greater, up to a maximum of 112 hours. Bona fide executive, administrative, professional, and outside sales employees are assumed to work 40 hours in each workweek unless their normal workweek is less than 40 hours, in which case the amount of leave is based on their normal workweek.

Individuals who work fewer than 40 hours per week receive an amount of leave equal to the amount of hours they worked on average in a 14-day period.

For individuals whose hours vary from week to week, a hiring entity must use the following calculation to determine the average hours in a 14-day period:

  • A number equal to the average hours the individual worked per day over the 6-month period ending on the date the public health emergency was declared, multiplied by 14, including any hours for which the individual took leave of any type;
  • If the individual did not work over such period, the individual’s reasonable expectation at the time of hiring of the average hours the individual would normally receive in a typical 14-day period.

Notably, the Philadelphia law takes a unique approach when individuals work for multiple hiring entities (as one might expect with, e.g., drivers for food delivery or transportation network companies). The mayor’s Office of Labor must establish a centralized system for calculating PHEL attributed to each hiring entity, then collect PHEL funds from hiring entities and distribute them to covered workers. However, until that system is established, an individual is entitled to PHEL from each hiring entity for whom the individual performed work during the public health work period according to forthcoming regulations.

PHEL is not necessarily a one-time benefit. Rather, it is available each time a public official declares a public health emergency based on a different emergency health concern or declares a second public health emergency for the same emergency health concern more than one month after the first emergency officially ended.

Another unique aspect of Philadelphia’s law is that hiring entities might be able to use existing benefits to comply. The law does not require a hiring entity to change existing policies or provide additional paid leave if its existing policy provides an amount of paid sick leave that meets or exceeds the amount of PHEL the law requires that may be used for the same purposes and under the same conditions the law requires. Some city councilmembers observed that the law did not clarify whether hiring entities that used a combined paid time off program (e.g., PTO individuals can use for vacation and sick time) would need to provide additional leave. Councilmembers agreed to work with the city’s labor and legal departments to clarify the language to indicate that no additional leave time would be required in such circumstances.

Covered Uses: A covered individual may use PHEL at any time during the public health emergency (and possibly for one month following the conclusion of such emergency1) when unable to work for one or more of the following circumstances:

  • the individual is subject to a federal, state, or local quarantine or isolation order related to the public health emergency;
  • a health care provider advises the individual to self-quarantine due to concerns related to a public health emergency;
  • the individual is experiencing symptoms related to a public health emergency and is seeking a medical diagnosis;
  • caring for an individual who is subject to a federal, state, or local quarantine or isolation order related to the public health emergency, or who a health care provider advises self-quarantine due to concerns related to a public health emergency;
  • caring for a child of a covered individual if the child’s school or place of care has been closed, or the childcare provider is unavailable, due to precautions taken in accordance with the public health emergency response; or
  • experiencing any other substantially similar condition specified by the United States Secretary of Health and Human Services in consultation with the United States Secretary of the Treasury and the United States Secretary of Labor.

A hiring entity is not required to allow a covered individual to use PHEL if the individual can reasonably perform work remotely, considering all relevant circumstances that affect the individual’s ability to perform remote work.

To the extent a federal or state law requires hiring entities to provide paid leave or paid sick time related to a public health emergency, hiring entities may require PHEL to run concurrently with such leave unless the other law prohibits concurrent use of paid leave. Related, the law requires hiring entities to provide additional PHEL to the extent the Philadelphia law’s requirements exceed the requirements of the other laws.

Individuals can use PHEL in the smaller of hourly increments or the smallest increment that the entity’s payroll system uses to account for absences or use of other time.

When leave ends, hiring entities must return covered individuals to the position they held when leave began.

Requesting, Verifying & Documenting Leave: Individuals must provide notice to a hiring entity as practicable and as soon as feasible, but only when the need for leave is foreseeable. The law does not address notice, if any, individuals must provide for unforeseeable absences. A hiring entity can request that a covered individual submit a self-certified statement asserting that leave was used for a lawful purpose.

The only discussion the law contains about documentation to substantiate a need for leave is a provision saying a public official’s public statement constitutes reasonable documentation for the use of PHEL, and that an individual is not required to provide their hiring entity documentation from a public official. The law does not address when entities can ask individuals to provide documentation, or what other forms of documentation may be reasonable to request, if any. For example, although part of the PHFWO, currently it is unclear whether PHFWO standards will apply to PHEL.

Rate of Pay: Hiring entities must pay PHEL at the worker’s regular rate of pay, and with the same benefits, including health care benefits, as the individual normally earns from the hiring entity, which cannot be less than the state minimum wage. Interestingly, the law cites to state overtime law for purposes of calculating the “regular” rate, something the general paid sick and safe time ordinance does not expressly do.

Similarly, for tipped employees, rather than incorporate standards in the pre-existing ordinance, the law incorporates pay standards in regulations implementing Philadelphia’s fair workweek ordinance:

  • If paid at least $7.25 per hour by the hiring entity, the rate of pay is the hourly amount paid to the individual by the hiring entity;
  • If paid less than $7.25 per hour by the hiring entity, the rate of pay is the numerical average of the following (published by the Pennsylvania Department of Labor and Industry):
    • the hourly wage for Standard Occupational Classification (SOC) Code 35-3011 “Bartenders”;
    • the hourly wage for SOC 35-3031 “Waiters & Waitresses”; and
    • the hourly wage for SOC 35-9011 “Dining Room & Cafeteria Attendants & Bartender Helpers.”

Prohibitions: A hiring entity cannot require an individual to find coverage for any shift during which the individual uses PHEL. Additionally, it or any other person cannot interfere with, restrain, or deny the exercise of, or the attempt to exercise, any right under the law.

Hiring entities cannot take retaliatory personnel action or discriminate against an individual for exercising protected rights, including but not limited to, using PHEL, filing a complaint or informing any person about any entity’s alleged violation, cooperating with the mayor’s Office of Labor in its investigations of alleged violations, and informing any person of the individual’s right under the law. Protections apply to a person who mistakenly but in good faith alleges a violation. Additionally, there is a rebuttable presumption of retaliation whenever a hiring entity discharges, suspends, demotes, or takes other adverse action against a person within 90 days of the individual (a) filing a complaint alleging a violation with the Office of Labor or a court, (b) informs any person about an entity’s alleged violation, (c) cooperates with the Office of Labor or others investigating or prosecuting any alleged violation, or (d) opposes any unlawful policy, practice, or act.

The law prohibits a hiring entity’s absence control policy from counting PHEL as an absence that may lead to or result in discipline, discharge, demotion, suspension, or any other adverse action, though a hiring entity can take action against an individual who uses PHEL for a reason the law does not permit.

End of Employment: A hiring entity need not cash out unused PHEL upon an individual’s termination, resignation, retirement, or other separation from employment. However, if it rehires the individual within six months of separation, the entity must reinstate the previous amount of PHEL the individual had when the working relationship ended.

Notice, Posting & Recordkeeping Requirements: Within 15 days of the law taking effect, a hiring entity must provide individuals notice of their rights.2 Entities must give notice that: (a) individuals are entitled to PHEL, the amount of PHEL, and the terms of its use guaranteed under the law; (b) retaliation against individuals who request or use PHEL is prohibited and that individual has the right to file a complaint or bring a civil action if PHEL is denied or the individual is retaliated against for requesting or PHEL. Entities comply with this requirement by either supplying each individual a notice that contains the required information or conspicuously displaying a poster that contains the required information in an accessible place in each establishment where such employees are employed. The notice must be provided in English and in any language that is the first language spoken by at least 5% of the employer’s workforce.

If employees telework or work through a web-based platform, or the hiring entity has no physical location, the entity must furnish notice through electronic communication or a conspicuous posting in the web-based platform.

For a period of two years, entities must keep records documenting hours worked, PHEL taken by employees and payment for PHEL. If the entity does not maintain or retain adequate records, or allow the enforcement agency access, it is presumed that the employer has violated the law, absent clear and convincing evidence otherwise.

Penalties & Enforcement: An individual may file a complaint with the mayor’s Office of Labor within a year of the date the person knew or should have known of the alleged violation. Alternatively, within two years from the date an alleged violation occurred, an aggrieved individual, or any entity whose member is aggrieved by a violation, can file an individual or class action lawsuit. However, unlike with the paid sick and safe time requirements in the law, an individual need not first file an administrative complaint before filing a lawsuit if a public health emergency has been declared.

Presumably, given the amendments incorporate the pre-existing paid sick and safe time ordinance’s enforcement provision, it also incorporates those penalties and damages. If so, that means a willful notice and posting violation is subject to a civil fine in an amount not to exceed $100 for each separate offense. Failing to pay for PHEL used, unlawfully denying PHEL, and retaliation claims carry potential criminal penalties. An individual can recover the full amount of unpaid PHEL, any wages and benefits lost or other damages suffered as the result of the violation of the law, and an equal amount, up to a maximum of $2,000, as liquidated damages. Additionally, the individual can recover reasonable attorney’s fees, and receive appropriate legal or equitable relief, including, but not limited to, reinstatement, back pay and injunctive relief.

                Pool & Healthcare Employee Benefits During a Declared Pandemic or Epidemic

The new statute, section 9-4117, applies to any employer that provides healthcare services and utilizes the services of “pool” employees or healthcare employees. The law defines a pool employee as any health care professional, other than an employee of a temporary placement agency, who works only when the individual indicates availability for work and who has no obligation to work when not indicating availability. Additionally, it defines a health care employee as any person who has full- or part-time employment within a healthcare organization, including but not limited to hospitals, nursing homes, and home healthcare providers. Finally, under the law, a health care professional is any person licensed under federal or Pennsylvania law to provide medical or emergency services, including but not limited to doctors, nurses and emergency room personnel. Notably, although generally the PHFWO contains a collective bargaining exception for employers with unionized workforces, it does not apply for purposes of section 9-4117.

The law requires that pool and healthcare employees are compensated for lost wages and medical expenses if they contract a communicable disease during a pandemic or epidemic affecting the City of Philadelphia declared to exist by the World Health Organization, the Centers for Disease Control and Prevention, or other recognized public interest health organization. Although the bill’s title suggests benefits are available when employees contract the disease “at work,” this language is not included in the actual bill text.

To receive these benefits, the employee must have worked for/been in the service of the employer at least 40 hours in the three months before the disease.

Employers must reimburse an employee for all lost wages related to the disease (isolation, treatment and recovery) when the employee is unable to work. The law requires reimbursement for the number of days the employee is unable to work, payable at the employee’s normal rate, in an amount equal to the number of work days the employee would have worked if the disease had not been contracted, which must be equal to the average number of days worked per week during the three months before contracting the disease.

Additionally, the employer must either reimburse the employee for all medical expenses related to treatment for the communicable disease or provide such care as needed at its facility at no cost to the employee.

Currently, it is unclear whether various pre-existing PHFWO provisions will apply to this new statute, e.g., when employers can request documentation supporting an absence. We hope the enforcement agency clarifies this issue via regulations or FAQ.

Next Steps

It is unclear when regulations or guidance concerning either new requirement will issue. Until that happens, the statutory text is all covered entities have. Because both new requirements took effect immediately, covered entities should consider immediate action, like consulting employment counsel to review and revise, if necessary, policies and practices to ensure they comply with the new requirements.

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