CODE OF ETHICS. To consider our trade worthy as affording us distinct opportunities to serve society.

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2 Page 2 April 2012 CONTRACTORS CODE OF ETHICS AFFILIATES Affordable Drain Service All American Mechanical Inc. Ameri-Mex Plumbing American Residential Service Anderson Plumbing, Heating & Air A.S.A.P Plumbing Bill Howe Plumbing, Heating & Air Black Mountain Plumbing BPI Plumbing Brinks Investigation Services C. Leafdale Plumbing Cable Pipe & Leak Detection Collins Plumbing Dependable Plumbing Down Under Plumbing Drum Plumbing Ideal Plumbing Heating, Air & Electrical J.A. Brien Plumbing Company, Inc. LB Powers & Son Plumbing Master Plumbing & Leak Detection My Plumber, LLP Perry Plumbing Plumbing Plus Relining Technologies Roto-Rooter Plumbers Russell Plumbing Stevenson Plumbing, Heating & Air Sun West Plumbing TLC Plumbing USA Jetting Drain Pros To consider our trade worthy as affording us distinct opportunities to serve society. To improve ourselves, increase our efficiency and enlarge our service, and by so doing attest our faith in the fundamental principles of life, that we profit most who serve best. To realize that we are business persons and ambitious to succeed; but we are first ethical persons, and wish no success that is not founded on the highest justice and morality. To maintain the highest ethical standards of advertising, pricing, selling, installation, and service guided by the principles of honesty and integrity. To promote the latest technological advances in the design, types and methods of installation of plumbingheating-cooling systems; using equipment and materials complying with the standards recognized by this industry. To enter enthusiastically into the association work --to give as well as take--and do our part in elevating the industry. To support all progressive moves that are being carried out along the lines of trade extension, standardization and sanitation. To conduct our affairs that others in our business will find it wise, profitable and conductive to happiness to emulate our example. To follow and execute our work in conformity with federal, state, county and city building, safety, energy and water conservation, fire and housing codes; and refusing to be a party to any actions that violates these regulations. To promote conservation of water and energy to the public we serve through improved, adequate, safe, modern installation of energy efficient equipment. Advanced Detection Services Answer California Approval Code Carrhill Company City Chevrolet Contractor News & Views The David Companies Dry Down Inc. Dry Force of California El Cajon Plumbing & Heating Supply Emergency Services Restoration, Inc. The Energuy Express Pipe & Supply Federated Insurance Ferguson Enterprises, Inc. Howard C. Fletcher In-Sink-Erator J&M Keystone Johnson & Wood Insurance Services JPC Restoration JW Cleaning & Restoration Marks, Finch, Thornton & Baird, LLP Mega Western Sales Miguel Simpson Eng. & Equipment Mission Valley Pipe & Supply MSI HVAC Noritz America Quick Dry Flood Services Rebuilding Together Safari Signs Signature Sales Super Signs Todd Pipe & Supply Wateridge Insurance Services Winning Colors Printing Pride in Our Past Faith in Our Future To inquire about PHCC membership, please contact or Danielle@phccsd.org

3 Page 3 PRESIDENT S MESSAGE Happy April, Friends and Members, As April is upon us and we move into spring, the days get longer and that means MORE WORK! With the short winter days and the holidays, not as much gets done as we would hope. Spring and summer gives us the extra time we need to finish projects and set our plans for the New Year into full effect. For the PHCC it also means getting a new Board of Directors elected, and I am happy to see some new names on the ballot. I am also happy to see some Directors staying involved, staying connected and participating in the growth and change we are still working towards, and becoming instrumental in that change. We still are looking for new Directors to participate; we are always looking for good people who are interested in what happens with their membership dues and their donations. The best way is participate in the oversight of the organization through Board service. It offers a whole new perspective on how well things are done and how well new ideas (your ideas) can make those changes you want to see in the PHCC; and not at just the local level, but at the State and National level as well. Board participation gives you the front row and the voice, the stage, to make change happen. Enclosed is our Board ballot, please send it in with your choices, or write yourself in! It s an election year, so let s start the democratic process with this ballot! Since it s an election year, one of the issues that comes up almost every year is how the State of California affects the way business is done. This year we can all do something about it! Find the candidates that are business friendly (and they are in both parties and independents), and look at their history of creating change positive change. If they do not support the business community by advocating tort reform, tax reform, protection of individual rights, if they do not support the words laid out in our mission statement, to advance, educate, and train our industry and protect our environment and the health and safety of society they will not be friendly to our industry. Choose candidates who will protect our trade from untrained handyman semi-skilled or unskilled labor. Choose candidates who will support equal opportunity; those with the skills and licenses and certifications to bid on all projects, not just those who pay for play by requiring all of their members dues go to one political party only; who will skew the bidding process to benefit only one type of tradesman. Support ballot measures that speak to these principals as well, that support fair and open competition. In just a few short weeks we will be having our BIG EVENT! Saturday May 12 th will be our 20 th Anniversary Trade Show. Danielle has made this year s event really different with a new location and a new floor plan. Take a minute to our website, to preregister. It s fast and EASY! This year s show, done at the close of the PHCC-West convention will really be something new and exciting. Don t miss out! Lastly, I want to thank everyone who participated in our annual golf tournament. Other than a few hiccups, it was one of the most enjoyable tournaments we have had in quite a while, with the added benefit of supporting the Scharbarth family. The PHCC of San Diego thanks all of you for your support and generous donations of time, money and prizes that made for a really fun day! See you again next year!! Living the dream! Mark Ames President Search: PHCC of San Diego

4 Page San Diego Board Ballot Nominations The 2012 Official Board Ballot will be mailed to you company by April 15th. Please be sure to complete the form and mail back as soon as possible. The following volunteers are in running for the Board of Directors! Good Luck!! Executive Board Officers: President: Kelly Anderson, Manager, Anderson Plumbing Heating & Air Vice President: Steve Fox, Owner, Steve Fox Plumbing Secretary: Amber Baynard, Operations Manager, Bill Howe Family of Companies Contractor Officers: You will vote for 3. Scott Ferrell, Owner, Black Mountain Plumbing Mike DeSilva, Owner, Plumbing Plus John Perry, Perry Plumbing Miguel Sanchez, Bill Howe Plumbing Lani Testa, My Plumber Affiliate Officers: You will vote for 2. Katie Biddlecome, Dry Force Doug Bos, Dry Down Robert Price, Ferguson Enterprises Gina Robinson, Quick Dry Flood Services Daniel Sanders, Wateridge Insurance Services If you would like to add your name to the list above, please notify me as soon as possible! You can have a hand in shaping the future of the organization and the trade itself. We are trying hard to find more energetic, contractor members that want to make a difference and participate on the Board of Directors. We are working hard to strengthen our mission statement of being dedicated to the promotion, advancement, education and training of the industry for the protection of our environment and the health, safety and comfort of society. Now is the time to get involved. Do more than pay Dues! Participate! Contact Danielle, or Danielle@phccsd.org for information on how to get on the ballot for the upcoming year!

5 Page 5 For Immediate Release: March 23, 2012 For More Information: Charlotte R. Perham (800) perham@naphcc.org PHCC: 130 Years of Professionalism This year marks the 130 th anniversary of the Plumbing-Heating-Cooling Contractors National Association (PHCC.) PHCC has several special observances planned to recognize the vital role its members have served in safeguarding the health, safety and comfort of society and protecting the environment. Since its founding in 1883, PHCC has continued to build on its unique heritage and bring members together to advance the industry, said PHCC President Keith Bienvenu, Bienvenu Brothers Plumbing, Metaire, La. We are both proud of our past accomplishments and very much focused on the future. As the industry evolves with new services, technologies, standards and regulations, PHCC continues to provide the high level of education, training and advocacy that plumbing and HVACR contractors need in an evolved business environment. That has been the hallmark of our association throughout its 130-year history, and it continues today. During PHCC s April Legislative Conference, the association will honor the 125 founding contractors that had the vision and courage to join together to address industry issues. The centerpiece of this event will be a reception on Capitol Hill named in recognition of Col. George D. Scott, the first president of PHCC. National legislators have been invited to join PHCC members in the celebration. The anniversary observance will continue during CONNECT 2012 Oct. 3-5 in Philadelphia. There, PHCC members can not only join in the anniversary celebrations, but also participate in a variety of seminars and networking opportunities that can help discover modern-day ways to continue the strong tradition of protecting the health and safety of the nation today. Look for updates on the 130 th anniversary celebration at

6 Page 6 Letter of Interest: Comments on Environmental Impact Report, Balboa Park Plaza E. Shearer-Nguyen Environmental Planner City of San Diego Development Services Center 1222 First Avenue, MS 501 San Diego, CA March 20, 2012 Dear City Staff and Decision Makers: The Plumbing Heating Cooling Contractors Association of San Diego is a non-profit industry organization focused on ethics and best practices for our industry including promoting water conservation. The Draft Environmental Impact Report for the Balboa Park Plaza de Panama Project dated January 23, 2012 does not provide an adequate analysis of the water supply uses or analysis for alternative projects and only states that this is not required. Last year, the City of San Diego ran a public relations campaign promoting citizens to reduce their water consumption patterns by 20%. While the city has stopped that campaign, the projections for growth in our region certainly show that without conservation measures in place there will be a strain on our water supply in the years ahead. This is an issue for our region especially because we rely upon water resources from other regions. The City of San Diego and PHCC have fundamental roles in promoting projects that are environmentally responsible in terms of how we utilize the water supply. The data in the draft EIR for this project shows that there is a projected threefold increase in the amount of landscape water that would be used for the proposed project. The report concludes that this does not meet the threshold for further analysis. However the additional amount of water used for landscaping is projected to be over 1.9 million gallons per year and instead of reducing the water supply in the park through better management and xeroscape landscapes the projections show that water supply is going to increase. The report does not provide any analysis of water use to accommodate the increases of public spaces in the park plaza; these figures were left out of the report all together. Therefore, for these reasons we request that further analysis is conducted to consider the entire scope of water supply resources for this project and to provide the analysis comparing this project to the alternatives projects in terms of water supply. We believe that the draft EIR as presented does not provide sufficient information to guide the public or decision makers with alternatives and that by not providing any analysis the EIR is insensitive to our regions limited water resources. This letter was approved by the Board of Directors of PHCC on March 20, Sincerely, Danielle Dorsey Executive Director, PHCC - SD Drafted by: Janet O'Dea, Powers Plumbing 1705 W. Lewis St. San Diego, CA janet@bestsandiegoplumber.com PHCC - SD 7884 Convoy Court San Diego CA danielle@phccsd.org

7 Page 7 ESR Celebrates 20 Years! Emergency Services Restoration, Inc. (ESR) would like to thank all its clients, affiliates and supporters as we celebrate twenty years of committed service to California as the leader in the water damage restoration industry. We thank you for the opportunity to deliver the superior customer care and quality service that you deserve. Our mission has consistently been to maintain the highest level of integrity and professional competency in recognition, evaluation and control of health hazards when dealing with all types of water damage. Our vision is to continue to strengthen our industry with innovative services while protecting the health and safety of our customers as the forefront of our core values. Dan Hartwell, founder and CEO of ESR, began his footprint in the industry at the young age of nineteen working in the carpet cleaning and water damage restoration industry. It was his experience and passion to better the industry that Dan established ESR in Since then ESR has become the pioneer in the mitigation of clean, gray and sewage water restoration. As an on-call emergency response company, ESR is available 24/7/365 with an average response time of minutes. Areas of service include Northern/Southern California and other states. ESR is also available to respond to national disasters, as needed. With the most technician certifications in the industry and state-of-the-art equipment exclusive to ESR, we have set the standard in proper mitigation of all water losses. With ESR s liability reduction programs, we have saved the plumbing industry and customers millions of dollars in our twenty years. ESR thanks its affiliates Restoration Training & Technology (RTT) and Immediate Response Restoration (IRR) for its extended services making us the preferred full-service restoration company in the industry. RTT offers third-party IICRC and OSHA certification training and consultation to ESR, our clients, insurance carriers and others. IRR offers general contractor services specialized in construction losses caused by water damage such as demolition, mold abatement and structural repairs. Our team of Master Restorers, available through ESR and affiliates, has made us the most sought out water damage restoration company by insurance carriers and attorneys for expert consultation. Thank you for your business and support as we strive to continue bringing you superior customer care and service. A special thank you to those that joined us in celebrating our twenty years at the Los Angeles PHCC trade show. And last but not least, thank you PHCC of San Diego for the opportunity to be an extended service in the promotion and advancement of the plumbing, heating and cooling industry. We look forward to serving and protecting you in the forefront of the water restoration industry. Thank You ESR for being a part of the PHCC!!

8 Page 8 March Dinner Meeting Highlights! For all of you who attended, Thank You to for taking time out of your busy schedule to join us for the PHCC March dinner meeting. If you missed it, we hope to see you in April! Our feature presentation was done by Jeff Hirsch with SEG&E. Jeff has worked with SDG&E for 30 and has held the following positions: Insulation Inspector, Residential Conservation Services auditor, Commercial Industrial auditor, and a Special Investigator. Currently he works with the Trade Ally, Commercial Rebate and Incentive programs. Jeff discussed the current rebates available for residential and commercial properties. Please visit for the rebate applications. Available Rebates for Homeowners Attic or Wall Insulation - $0.15 per sq. ft. Pool Pumps and Motors - $200 Room Air Conditioners - $50 Clothes Washer - $35 Electric Water Heaters - $30 Natural Gas Water Heaters - up to $75 Central Natural Gas Furnace - $200 Remember, dinner meetings are essential networking and educational opportunities for you and your business. Be informed about current local issues that affect our industry, hear the most up-to date Association news, and also let your voice be heard! This is a great way to stay in-touch, so don t miss out! Contractors, 2 free dinners are included in your Relays and Contractors Date: Wednesday, April 11, 2012 Time: 1:00pm - 3:00pm FREE Member Webinars: There are many good reasons why relays and contactors are confusing. How can a single control have more than one voltage? How can one switch be open at the same time another is closed? For that matter, what do open and closed mean, especially when they are often the opposite of the label? Participants will learn the differences between switching and isolation relays, how to control line voltage equipment with low voltage controls, and how to troubleshoot relays. The target audience is new controls technicians and supervisors who train them. Speaker: Carol Fey, Carol Fey & Associates, Sponsor: PHCC Educational Foundation & Kohler Benefit From Social Media in Just 10 Minutes a Day Date: Wednesday, April 18, 2012 Time: 1:00pm - 3:00pm Social media is not a fad, it s an opportunity. In fact, 70% of small businesses already use some sort of social media marketing Facebook, Twitter, YouTube, LinkedIn, or Blogger. In this one hour webinar, you ll learn the insider secrets and a step-by-step process to manage your social media in just 10 minutes a day. Speaker: Brian Kraft, Market Hardware, Sponsor: PHCC Educational Foundation & Kohler Free Webinars for Technicians To celebrate the launch of our new national web site, for a limited time the Foundation is making select recorded webinars that are a fit for technicians available for viewing at no cost. World Class Service Culture - Boost Customer Retention Types of Piping and Sprinklers for Residential Fire Sprinkler Systems What Shade of Green Are Your Customers? Drugs + Alcohol + Work Do Not Mix Stainless Steel Vs. Copper

9 Page 9 Dry Down Hosted Their First Annual Golf Tournament On Wednesday, March 28th, Dry Down hosted their First Annual Golf Tournament at Green River Golf Club in Corona, CA. David and Yvette Pages, Owners of Dry Down, put on a fun and successful event. The PHCC was there and thankful to be a part of it! Over 175 contractors through away their tools for a day to pick up the golf clubs. The scramble tournament started with a shoot-gun start at 8:30a.m. Although the morning was a little chilly, contractors alike could be found networking with a breakfast burrito and coffee The sun finally warmed up the air and it was a beautiful day of golf surrounded by the breathtaking views of the Santa Ana Canyons. As golfers made their was around the course. They were able to spend some time with the Sponsors that helped make the event happen. Special thanks to Express Pipe & Supply, Kohler, Ferguson Enterprises, Noritz, Mark Christopher Chevrolet, and Network Fleet. After 18 holes and lots of fun, golfers started to return to the clubhouse for the winners banquet and a buffet chicken and rib dinner. The group was growing excited to see all of the raffle prizes stacked up to be given away. Much to our surprise, before the raffles started, we were all called back outside to see a hovering helicopter. The copter was dropping balls on the course to add to the energy and excitement of the day. There were lots of TVs given away, and many other prizes, making everyone very happy to stay till the end. All in all, a great day! We look forward to a repeat next year! Thanks Dry Down!!

10 Page 10 Kevin Baucum, PHCC Year 4 Apprentice, Wins the PHCC of California's 15th Annual Apprenticeship Contest!! The PHCC of San Diego is very proud of Kevin, who proved to be the TOP Apprentice at the PHCC-GLAA's Flow Expo on March 3, The contest offers plumbing apprentices a truly unique opportunity to demonstrate their knowledge and skills in a practical, hands-on event that is fun and exciting. Competitors were required to rough in water supply and drain lines, and install a variety of fixtures over an eight-hour period. The journey for Kevin is just beginning. He was awarded a trip to the PHCC National Connect Convention to compete in the National Apprentice Competition in Philadelphia, PA in October. In addition, he was awarded a $500 prize check and lots of new tools and gifts from the contest sponsors to get his career started right! Kevin currently works for Black Mountain Plumbing under Scott Ferrell. Kevin's response to winning was, "I did it all for Paul! He wanted me to be here!" Kevin we are all very proud of you, and so is Paul! Congratulations Kevin!! And Good Luck in Philly!! You can do it! We Will Never Forget... There are many people who come and go in our lives. A few touch us in ways that change us forever, making us better for knowing them. Paul Chilson is one of those people. He made a huge difference in the PHCC Family. He had many co-workers and many friends, but when you were with Paul, he made you feel like you were his best friend. With his smile and his radiant energy, he made everyone he came in contact with feel important. We will miss you forever! The PHCC has set up an account in Paul s memory for his family. Donations can be made payable to: Plumbing Heating Cooling Contractors Paul & Terri Chilson Please note in the memo line: Paul Chilson 7884 Convoy Court, San Diego, CA 92111

11 Page 11 PHCC Apprenticeship Program. Call Today! The Plumbing Heating Cooling Contractors Trade Association of San Diego (PHCC-SD) is providing a trained workforce assuring the growth and competiveness of local businesses. The PHCC Apprenticeship Program will be completing its fourth year of training this June, providing journey level certification plumbing professionals upon completion. The plumbing industry is currently lacking the necessary skilled labor to supply all facets of work in progress. Without training, this problem will only increase. The PHCC is helping secure the industry's future, the contractor will be a more competitive force, and the community will benefit from improved quality of finished work. Educated and professional workers are in high demand in the plumbing industry. The PHCC Apprenticeship Training Program offers the individual a chance to "earn while you learn." The course combines classroom training courses with on-the-job training. This method of education allows individuals to combine real life experiences with applied knowledge. Wage increases are granted as the apprentice gains time in training and acquires experience. Apprentices are employed by contractor sponsors who provide on-the-job experience under the supervision of their journeymen and foremen. Each apprentice has their work experience recorded and filed in the student's records. Some business owners question, "What happens when you train your employees and they leave?" Bill Howe, Secretary, PHCC-SD, responds, I ask them a question right back what if you don t train people and they stay for 4 or 5 years providing unprofessional work? How successful will your business really be? Education is the key to success, and the PHCC is at the forefront of the plumbing industry. The Apprenticeship Program is an approved program by the Office of Apprenticeship, Department of Labor. Companies are able to federally register students as well as have them enrolled in the training program. It offers 156 hours of related classroom instruction per year. Classroom subjects include drafting and blueprint reading, mathematics, safety, state and local plumbing codes and regulations. The Apprenticeship Program gives trainees a thorough knowledge of all aspects of the plumbing trade. As time progresses, business owners and consumers recognize the value to of skilled PHCC professionals and look for the PHCC logo first. For more information, please danielle@phccsd.org or call PHCC s 2012 Legislative Conference Taking Care of Business Now is your chance to get involved in your industry and help influence the laws that govern it. From April 25-26, 2012, members of the Plumbing-Heating-Cooling Contractors National Association (PHCC) will be taking care of business during the annual Legislative Conference in Washington, D.C. Hear from Members of Congress and key regulatory officials, meet with your own congressional representatives face-to-face, and convey the small business priorities that are most crucial to the success of your company. Don t miss the legislative and issue briefings, an update on PHCC s grassroots movement, and useful tips for how to lobby effectively. You ll also want to attend the Congressional Awards Breakfast and the Closing Reception to honor a key Member of Congress. The event will conclude with an optional tour of various Washington, D.C. monuments. Make sure your voice is heard! Take care of your business now by registering for PHCC s 2012 Legislative Conference. Visit for more details, or contact Mark Riso, director of government relations, at (800) or riso@naphcc.org.

12 Page 12 Prepared for the PHCC Educational Foundation by TPO, Inc. Rules for Short Term Help Many companies are starting to see business pick up, finally! One question that quickly comes to any employer's mind is how can we build our capacity in a responsible way? Many of you experienced the economic downturn and felt the pain of having to let employees go. You may be wondering how you can get the help that you need without having the burden of being responsible for the complete package of a full time employee. During an unpredictable economy, businesses in all industries and sizes often turn to contingent employees including temporary or contract employees to fill a gap without having a long-term commitment. There are some good options; however, it's important to understand the pros and cons of short term help. Benefits of Temporary Employees As an employer, temporary employment allows you to hire the resources you need for specific jobs or times for example when you need to ramp up for a particular project or backfill for someone on leave. Temporary employees can work part time or full time, work directly for the employer or through an agency and may even work for more than one agency or employer at a time. Once the project is completed or the leave is over, the temporary employment is finished. The agreement is established up front and there is no firing or lay off. Starting people in a temporary status can be a good opportunity for you to evaluate an employee without the commitment of full time employment. You have time to see if the temporary employee has the skills you need and would be a good fit for the company. This arrangement is often called temp to perm. Temporary help can also be a good way to continue to get work done while you are searching for the perfect candidate for a role. Typically employers can find temporary employees though a temp agency or staffing company. The advantage to working with an agency is that they bear the burden of recruiting, screening, conducting background checks, and hiring employees. In addition, they take care of the hassle of paperwork such as payroll, tax forms, I-9 verifications, workers compensation insurance and in some cases they even offer benefits. Temp agencies are responsible for withholding employment taxes and the employer's portion of the Federal Insurance Contributions Act (FICA). The trade off is the fee you pay compensates the agency for handling the burden. A real benefit of working with an agency is if you are unsatisfied with the work that the temporary employee is doing, you simply call the agency. The agency deals with communicating the change in assignment to the current temporary employee and for providing a new staff person. It is valuable to build a strong relationship with the temp agency so they become familiar with your business needs and the types of employees that work well for your company. In return they can find reliable workers for you. If you hire a temporary employee directly, you typically pay a lower rate than if you use an agency. As the employer you assume the burden for all of the employment related obligations noted above. In most cases, you do not have to offer benefits such as paid time off, medical insurance or retirement plans, to a temporary employee. Factors such as whether you have distinct employee categories for temporary and regular employees, the length of time the temporary works for you and the specific benefit plan agreements determine what if any benefits have to be offered. Consult your HR professional or benefits broker for assistance in establishing a temporary employment category. Considerations for Temporary Employees When you use temporary employees, you may spend a lot of time bringing them up to speed and training them for only a short employment period. Temporary employees have less commitment to you as an employer; some even fashion themselves free agents ready to jump ship for a slightly higher wage somewhere else. As a result, you may have higher training costs because you don't benefit from long term employment to get a return on your investment. Similarly, other costs to hire the temporary employee like posting jobs or coordinating with an agency and your time to interview may be incurred more often when relying on temporary employees. You might also find productivity or customer service issues. If you have regular and temporary employees working side by side doing the exact same job except the temporary employee is not getting the same benefits as the regular employee can lead to morale problems. The regular employee might not want to be bothered with helping the temporary coworker or working out routines as it's only a short term situation. And without the security or commitment of regular employment, the temporary employee doesn't have the same sense of loyalty and might not bother with meeting your customer service standards.

13 Page 13 Rules for Short Term Help Continued... Independent Contract Employee Independent contractors are also an option to fill short term needs. Similar to temporary employees, there are fewer obligations to keep the person employed. However, temporary employees are not the same as independent contractors. Like temporary employees, independent contractors may also work on specific projects for specific periods of time, but they also must meet specific criteria, including the following: The contractor supplies his or her own equipment, materials and tools; all necessary materials are not supplied by the employer. The contractor may work for more than one company. The contractor controls how the work gets done. The benefits of independent contractors include building your capacity without raising operating costs. Although a contractor's hourly rates can be higher than regular employees, they are typically less expensive because you do not pay employer taxes or provide statutory benefits such as worker's compensation or voluntary benefits. Independent contractors are responsible for their own withholdings and taxes. You should collect a W9 at the start of the arrangement and issue the independent contractors a 1099 form at the end of the year to show their compensation. Some companies on the threshold of labor laws such as COBRA for continuation of benefits or the Family and Medical Leave Act (FMLA), bring on contractors in order to not have to immediately comply with those laws. For example, you have to offer COBRA once you have 20 employees counting both full time and part time positions. But if you later drop below 20 employees, you still have to comply with COBRA if you had more than 20 employees on more than 50 % of your typical business days in the previous calendar year. Using contractors allows you to have capacity of more than 20 workers until you are sure your business will sustain that many staff long term. Risks of Independent Contractors If a contractor is really an employee and is misclassified, you might face significant penalties. A key distinction with an independent contractor is you can direct the outcome of a contractor's work, however, you cannot direct how the work is done. For example, if you provide training on how you want the work done or provide the method and tools to do the work, you are treating the contractor like an employee. If it is found that an employer has misclassified an employee as an independent contractor, the employer is liable for all employment taxes, withholdings, and employer's portion of FICA taxes, in addition to interest and other fines. Some companies inadvertently imply the contractor is an employee by asking the contractor to agree to or sign the employee handbook, participate in company events and attend employee meetings. To help reinforce the contractor relationship, make a clear distinction between employee requirements and events and do not include the contractor. In addition, with an independent contractor you may be giving up some protections you have as an employer. While you do not pay workers compensation insurance for contractors, if a contractor is injured on your job, the contractor can pursue legal action to cover medical expenses and lost wages. If you are held liable, you do not have the insurance to protect your business. Additionally, employees have common law obligations to their employees on matters such as confidentiality and duty; contractors do not.

14 Page 14 Rules for Short Term Help Continued... Part-time Employees Another option you should think about is part-time employees. Part-time employees are considered regular employees with the expectations that employment will continue for an indefinite period of time rather than a fixed or temporary period. Because of the part-time status, you can realize savings on benefits, vacation or paid holidays. Even under the new healthcare reform regulations, you do not have to extend your group health plan to part time employees if they regularly work less than 25 hours a week. With part-time employees you can be creative with schedules and build your capabilities to match peak workflow hours. Unlike independent contractors, you can dictate the number of hours, time periods when work will be performed and where and how the work is done. For example, unless state law or collective bargaining agreements prohibit, you can have a part time employee work 10 or more hours only on your two busiest days of the week. Or you can use part time employees to eliminate the need for a full time regular employee to work a sixth day and incur overtime. Part-time employees are typically paid hourly and must comply with company practices and policies just as full-time employees do. They have to follow performance guidelines, safety rules and other company rules. Part-time employees are treated the same as full-time employees when it comes to the Fair Labor Standards Act (FLSA) which covers minimum wage, overtime pay, recordkeeping and child labor. In addition, part-time employees are covered under Occupational Safety and Hazard Administration (OSHA) for work related injuries and Employee Retirement Income Security Act (ERISA) policies for retirement benefits. Risks of Part-Time Employees It is a misconception that someone can only be an employee of one company; many part time employees piece together multiple jobs to meet their overall financial needs. However if the part-time employee has another part-time or full-time job, there might be a conflict if both employers need the employee at the same time. To build part-time employee loyalty, you can offer prorated benefits like paid holidays. For example, an employee who regularly works 20 hours a week might get paid half a day for the holidays your company observes. You can also include them in company events to build their perception of you as their primary employer. You can't prohibit employees from seeking other employment. What you can do is be clear on your performance expectations, have policies that prohibit conflicts of interest, and clearly state the need for confidentiality, and in some cases, a non-solicitation agreement might be appropriate. Remember, as regular employees, part-time staff is subject to your policies. As your business changes, you may increase the part-time employees hours. It is important to track eligibility for benefits based on hours worked per week or even in a year for your different benefit plans. For example, eligibility for ERISA plans like a 401(k) is frequently based on working 1000 hours a year which equates to 20 hours a week. Your life insurance or disability plans often have eligibility thresholds that are less than your medical insurance plan. Besides the risk of violating a law like ERISA, you do not want to be ethically or financially responsible if an employee has an acute need for a benefit like disability and meets eligibility requirements, but was never enrolled. Summary Until economic indicators show an ongoing recovery and you have confidence that an increase in your business can be sustained, the flexibility that temporary help, independent contractors and part-time employees provide is worthy of consideration. The right approach depends on your business and what will serve you and your customers best given the advantages and disadvantages of the different models. Factors such as costs you incur, regardless of employment status like training, the importance of reliability and staff loyalty that you need to meet your business objectives, and the expense savings of not having to offer benefits should all be considered. And let's all hope that in short order the need for contingent workers is to keep up with rapid growth! This content was developed for the PHCC Educational Foundation by TPO, Inc. ( Please consult your HR professional or attorney for further advice, as laws may differ in each state. Laws continue to evolve; the information presented is as of February Any omission or inclusion of incorrect data is unintentional. The PHCC Educational Foundation, a partnership of contractors, manufacturers and wholesalers was founded in 1987 to serve the plumbing-heating-cooling industry by preparing contractors and their employees to meet the challenges of a constantly changing marketplace. If you found this article helpful, please consider supporting the Foundation by making a gift at Sources: &

15 Page 15 Take a peek at the PHCC revised website: Register online for the Trade Show!! You Are Invited to Join the PHCC of San Diego If you are not a member of PHCC of San Diego, we invite you to join us for a year and find out what we can do for you and your business! What are the benefits of the PHCC membership? Broaden You Knowledge: As a member, you will have access to so many industry resources- written, web-based, association meetings- great ways to gain information and stay on top of industry issues! Contractor Relationships: Members of the PHCC of San Diego not only share their experiences and knowledge with each other, but they refer business opportunities and contacts as well. You can share ideas, offer advice and use other members as sounding boards. And you will make some great friends along the way! Apprenticeship Training Opportunities: The PHCC of San Diego apprenticeship program is available starting this August. This innovative four year apprenticeship certification program is like none other. The apprentice learns faster, retains more and helps raise the standard of training back at the company. Students earn as they learn! If you are a contract member and have never been to our monthly membership dinner meeting, we invite you to join us complementary. Come see what the PHCC is all about. For more information on the PHCC of San Diego, please Danielle@phccsd.org The year is looking bigger and brighter for the PHCC of San Diego! I have been working hard in the office to update our look and in-turn your Member Benefits. If you have not already, please provide information for your Member Page. Take a look and give it a facelift! This will help drive traffic and business to your company. This is your page on the PHCC website! Please make it your own and provide me with the information you would like on it. Whether it is contact information, a logo, a paragraph describing your company, an advertisement or just deep thoughts, please send the information today! Anytime you want to update, your page...just send an with the information to danielle@phccsd.org! I work for you!! Attention Members Send Us Your News!! If you have any new info about your company (great events, new milestones, etc.) your press release by the 18th of each month and we will try to include it in our newsletter! This is a great way to promote you company and accomplishments. Simply submit your press release to Danielle at Danielle@phccsd.org. ADVERTISE HERE! Promote your company! The PHCC newsletter is a convenient, affordable way to bring your message to the industry. Market your products, services, or employment needs in our highly targeted publication. Call Danielle at the PHCC office, , for more details and advertise TODAY!

16 Page 16 April 2012 Events You Should Know! ICC Meeting The first Wednesday of every month. April 4, 2012, 10:00 am 12:00 noon Esgil Corp Chesapeake Dr. San Diego, CA IAPMO San Diego County Chapter Meeting The first Tuesday of every month, location varies. April 3, :30 am. 1:30 pm, Cost: $15.00 Hunter Steak House 1221 Vista Way, Oceanside, CA Contact: David Gams, IAPMO: City of San Diego Chapter The second Wednesday of every month. April 11, 2012 Filippi s Pizza Grotto 5353 Kearny Villa Drive, San Diego, CA Contact: Ed Avila, Welcome New Member: All American Mechanical First licensed as C-36 plumbing contractor in 1991, we also are a licensed 'B' general contractor and C-20 heating & cooling contractor as well. We have traditionally performed in the commercial and industrial markets. Government contracts, defense contractors, as well as private commercial clients have been our primary focus. We are experienced in lab, bio-pharm, cleanroom, and process piping as well as standard commercial / industrial plumbing and pipefitting. With experience ranging from housing to validated process systems we enjoy providing solutions to clients needs in a timely and cost effective manner. ~Jon Forbes~ All American Mechanical Inc PHCC Membership Dinner Meeting The second Thursday of the month. April 12, :30pm Featured: Scott Newton, ASPE The Butcher Shop 5255 Kearny Vila Road, San Diego CA PHCC San Diego Tradeshow May 12, 2012, 9:00am 2:00pm PHCC of San Diego Industry Trade Show In conjunction with the 2012 PHCC West Convention May 9-12, 2012 Town & Country Conference Center 500 Hotel Circle North, San Diego, CA PHCC Installation June 23rd (Location TBD) ~ PHCC Legal Membership Benefit ~ Our members are entitled to a 15 minute consultation with our attorneys, Cook Brown, LLP, on legal issues related to labor, employment, wage and hour law, as well as other issues that can affect our members, both on and off the job site. Carrie Bushman can be reached at (916) or by at cbushman@cookbrown.com.

17 PHCC MEMBER BENEFITS Monthly Membership Dinner Meetings 2 free dinners per contractor member Annual Trade Show Monthly Newsletter Networking Web Page, your company listed and linked Member notification s Links to social media Access to PHCC training facility based on availability Business and Technical Training Political and Legislative Representation Journey-level Certification & Code Update Class Apprenticeship Training Program Representation at ICC/IAPMO meetings Local Home Shows Promoting PHCC Members Social Events Family Picnic Golf Tournament Holiday Party Ball Games Affiliate membership discounts, ADP, Aramark, Bank of America, Enterprise Fleet Services, ExxonMobil Fleet Card, Equigard, Federated Insurance, Ferguson, MBNA Credit Card, Nebs, Technical Support Thank you for your continued support participation with the PHCC of San Diego. We are looking for new members and encourage you to bring a friend or prospective business owner to the next dinner meeting to experience the benefits of membership! PHCC of SAN DIEGO BOARD OF DIRECTORS PRESIDENT Mark Ames Roto-Rooter Plumbers (619) VICE-PRESIDENT Kelly Anderson Anderson Plumbing, Heating & Air (619) SECRETARY Bill Howe Bill Howe Plumbing, Heating & Air (619) DIRECTORS Doug Bos Dry Down of California (888) Jason Crandall Ferguson Enterprises Scott Ferrell Black Mountain Plumbing Alex Galicia BPI Plumbing (619) Lani Testa My Plumber (858) IMMEDIATE PAST PRESIDENT Jeff Heyveld Stevenson Plumbing, Heating & Air (760) Page 17

18 Page 18 PHCC West Convention: Schedule at a Glance May 8th May 12th Town & Country Convention Center Don t Miss Out!

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