All posts by : psgmlaw

Best Lawyers has recognized Pace Selden Gilman Marks PLLC (“PSGM Law”) in the 2025 Edition of “Best Law Firms”® for Commercial Litigation.  The Best Lawyers rankings are based on a rigorous evaluation process that includes the collection of clients and professional reference evaluations, peer review from leading attorneys, industry leader interviews and review of additional firmographic highlights provided by law firms as part of the formal research submission process.

Earlier this year, David Selden was recognized in the 2025 Edition of Best Lawyers® in America for his work in Commercial Litigation, and Danny Marks was recognized in the 2025 Edition of Best Lawyers: Ones to Watch in America® in the following practice Areas: Alternative Dispute Resolution, Commercial Litigation, Construction Law, Corporate Law, Labor and Employment Law – Management, Litigation – Construction, and Litigation – Labor and Employment.

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Julie Pace was a keynote speaker at the 2024 CFMA Southwest Conference on understanding the latest developments in employment law and risk management strategies to protect the company on September 23, 2024.

PSGM Law is proud to support our local youth at Prescott Valley Football & Cheer Club!

Hitmen Youth Football & Cheer is dedicated to providing Prescott Valley’s youth with an incredible tackle football and cheer experience. We’re proud to support such a fantastic organization that fosters teamwork, discipline, and fun in our community.

Learn more about how PSGM Law is making a difference and ways to support you at psgmlaw.com.

By Julie Pace, David A. Selden and Heidi Nunn-Gilman

After more than 40 years, the Federal Government proposes making a change to OSHA’s inspection procedures under 29 CFR 1903.8, which could drastically impact non-union employers.  Currently, the Federal OSHA Walkaround Representative who is authorized to accompany the inspector is limited to an employee of the company or, if the employees are represented by a union, an authorized representative of the union.

A. WHAT IS OSHA’S PROPOSED CHANGE? 

The new Federal OSHA proposal would broaden the definition of the Walkaround Representative to allow workers to designate someone who does not work for their employer to represent the workers and accompany the inspector during an OSHA inspection.

The proposed OSHA rule, which is under final review before implementation, would allow multiple persons who claim to represent employees to accompany inspectors, including potentially union organizers from multiple and competing unions, community activists and organizers, and other third-party outsiders.

Arizona has a State-approved OSHA plan administered by Arizona Division of Occupational Safety and Health (ADOSH).  ADOSH reviews and generally adopts Federal OSHA rules, but can adopt different rules that are at least as effective as the Federal rules or are able to clarify items, which is what the Arizona Legislature seeks to do with HB 2209.  The Amendment does not change current law regarding OSHA designated walkaround representatives but seeks to close the gap on risk issues to companies that the new proposed federal rule failed to address.

B. HOW DOES THE PROPOSED OSHA RULE INCREASE RISK AND LIABILITY TO EMPLOYERS?

Frequently, when long standing precedent is proposed to be materially changed, there can be unintended consequences, as is the case with the new proposed Federal OSHA rule.  Generally, the stakeholders, such as businesses in this matter, identify and try to educate and persuade the Government agency to modify its language to close gaps or loopholes that cause harm to companies.

In Arizona, this should be a bi-partisan effort to protect Arizona employers who raised the concerns about the issues with the new federal proposed rule.  The Federal rule goes too far without protective guardrails to employers.

The new proposed Federal rule is silent regarding important items such as:

1. The number of outsiders who can join an ADOSH inspection;
2. Who pays for outsiders injured during an ADOSH inspection (i.e. who carries the workers compensation (WC) insurance for the third-party outsiders and how does WC exclusivity work?);
3. How does ADOSH ensure that a Company’s trade secret and proprietary information are protected in the same manner as currently provided in Arizona law if third-parties are permitted under the new proposed rules. ARS 23-408.
4. Ensure third-party outsiders are trained in safety before joining OSHA inspection.
5. Ensure third-party outsiders have and use Personal Protective Equipment (PPE)  at jobsites.

Arizona employers need to be protected regarding the above items.  Arizona employers should not have trade secrets jeopardized or be subject to personal injury actions for being compelled to have third parties attending ADOSH inspections.

C. The Rep. Matt Gress HB 2209 Amendment Is A Solution Proposed to Help Protect Arizona Employers, While Preserving the Status Quo For ADOSH Inspections.

Representative Matt Gress has taken the lead and sponsored the HB 2209 Amendment to protect businesses and safety professionals in Arizona during OSHA inspections and preserves the status quo for ADOSH inspections.

Representative Gress worked with the business community to draft and sponsor HB 2209, which amends the specific section of Arizona law (A.R.S. § 23-408) that governs procedures for OSHA inspections by ADOSH.  The law would protect business and prevent abuses that can be damaging to Arizona businesses if the federal procedures are changed to open up OSHA inspections to outside persons in workplaces that are not unionized.  The specific provisions of the bill would:

1. Preserve the right of a union representative to act as the Walkaround Representative for workplaces where the workers are represented by a union and subject to a collective bargaining agreement.

2. If federal law requires that another person can be present in non-unionized workplaces as the Walkaround Representative, ADOSH would not consent to third-party representative to join the walkaround inspection without the following requirements, including:

a. Only one additional person as an employee representative would be allowed to be present during the OSHA inspection for non-unionized employers. This prevents multiple people showing up to disrupt workplace or cause safety issues. a.

b. To prevent the non-employee Walkaround Representative from being injured and to prevent lawsuits to claim injuries and potentially harass the employer, the non-employee Worker Walkaround Representative present during the ADOSH inspection can be required by the employer to have the following:

i. Appropriate safety training for the worksite.

ii. Personal protective equipment and other safety equipment.

iii. Workers compensation insurance coverage that covers the non-employee Walkaround Representative and identifies the Company as an additional insured (Additional insured coverage helps protect employer if third party has injury during the inspection).

iv. To prevent the non-employee Walkaround Representative from damaging the company by disclosing confidential, proprietary and trade secret information, ADOSH would ensure that the third party enter into written agreement to maintain the confidentiality of the company’s proprietary information.  This is necessary because allowing outsiders to accompany OSHA inspectors could open the door to the opportunity for an employee to claim to be represented by a person who has an interest in committing industrial espionage or seek access to information for which disclosure could cause harm to the competitive position of the company from whom the information was obtained.  The outsider could not accompany the ADOSH inspector to view and photograph confidential manufacturing process and trade secret information unless a signed confidentiality agreement was in place.

There are provisions in existing law for ADOSH to be required to respect the confidentiality of company’s trade secret information, but those provisions do not apply to third-parties who accompany ADOSH inspectors. This provision is important because OSHA inspections can create access to confidential manufacturing methods, product formulas, personal information and more.

c. Add a definition of “authorized employee representative,” which is currently not defined in Arizona law.  The amendment would add a definition, “the agent of a labor organization that has a collective bargaining relationship with the employer that represents the employees who are members of the collective bargaining unit and who are employed at the location to be inspected.”  This definition is consistent with current federal law pursuant to 29 CFR 2200.1(g) and preserves the current ADOSH inspection authority regarding union representatives.

D. Federal OSHA Area Director Barnett Responded to the Rep. Gress HB 2209 Amendment

In response to the Gress Amendment, Federal Area OSHA director Zachary Barnett issued a detailed letter addressing items in Rep. Gress Amendment.

E. Rep Gress Response to OSHA Area Director Barnett Letter

Rep. Gress has a detailed response to OSHA Area Director Barnett regarding the HB 2209 Amendment.

To keep up on information from Rep. Gress regarding this issue, please feel free to subscribe to his newsletter at www.mattgress.com/newsletter-signup.

F. Conclusion

With this much dialogue, hopefully good can come of the situation and many Government officials and elected officials in a bi-partisan manner can realize that the current form of the proposed new Federal rule needs modification.  Arizona companies should not be subject to new financial risk and loss of trade secret and proprietary information.

The HB 2209 Amendments seeks to supplement existing state law for ADOSH and only apply if the new federal proposed rule goes into effect.

Without the Governor and the Legislature approving the HB 2209 amendment, the current law has no limit on the number of persons that can be designated as the non-employee Walkaround Representative.  There would be no provisions to protect a company’s confidential or proprietary information or protect the employer if the Walkaround Representative was injured during the inspection, even through no fault of the Company.

Arizona companies deserve protections.  Everyone appreciates the hard work and diligence of all of the elected officials to dive deeper into the details of the proposed new federal law on changing OSHA inspections, recognize the real financial consequences and losses to companies if there are no protections, and work together to achieve a solution that keeps Arizona businesses strong and competitive.  Thank you to the Governor and all legislators for taking the time to learn about some of the gaps not addressed in the new proposed federal rule change.

By Heidi Nunn-Gilman, Julie Pace and David A. Selden 

On January 10, 2024, the U.S. Department of Labor announced a final new rule regarding the classification of workers as independent contractors or employees.  The new rule goes into effect March 11, 2024.  The final rule rescinds the independent contractor rule implemented in 2021 under the Trump Administration.  According to DOL, the new rule embodies the “economic reality” test based on the totality of circumstances, as previously established by the courts.

NEW SIX FACTOR TEST FOR DETERMINING INDEPENDENT CONTRACTOR STATUS.

The final rule applies the following six factors to analyze whether workers are employees or independent contractors:

1. a. opportunity for profit or loss depending on managerial skill;
2. b. investments by the worker and the potential employer;
3. c. degree of permanence of the work relationship;
4. d. nature and degree of control;
5. e. extent to which the work performed is an integral part of the potential employer’s business; and
6. skill and initiative

According to the DOL, no factor has any predetermined weight and additional factors could be considered if they indicate whether the worker is in business for themselves or is economically dependent on the employer.

THE RULE PROVIDES EXPLANATIONS OF THE SIX FACTORS.

The new rule contains explanations of how DOL will interpret each of the six factors and what facts may be relevant to determining whether the factor supports the conclusion that an employee is an independent contractor or an employee.

Opportunity for profit or loss depending on managerial skill considers facts such as:

a. whether the worker can meaningfully negotiate the charges for their services;

b. whether the worker can choose the timing of the work and accept or reject assignments;

c. whether the worker markets and advertises their services or makes efforts to secure and expand their business;

d. whether the worker makes decisions about hiring workers, renting space, purchasing or renting materials and equipment, etc.

Decisions such as whether to work more hours at a fixed rate job does not, according to the new rules, reflect the exercise of managerial skill.

Investment by the worker and employer considers whether the worker is making investments that are capital or entrepreneurial in nature.  Tools or equipment for a specific job or costs imposed by the employer are not considered capital or entrepreneurial in nature.  Capital or entrepreneurial investments “serve a business-like function, such as increasing the worker’s ability to do different types of or more work, reducing costs, or extending market reach.”  The investment by the worker is also compared against the company’s investment in terms of whether the worker is making similar types of investments to the company, even if on a smaller scale.

Degree of permanence of the work relationship favors employee status when it is indefinite, continuous, or exclusive.  It favors independent contractor status when the work is project-based, sporadic, definite in duration, and non-exclusive.

Nature and degree of control considers not only the company’s actual control, but also the company’s right to control the performance of the work.  Relevant facts may include:

a. whether the company sets the workers’ schedule;

b. whether the company supervises the performance of the work;

c. whether the company limits the worker’s ability to work for others;

d. whether the company uses technological means to supervise the work;

e. whether the company reserves the right to supervise or discipline the worker;

f. whether the company controls the economic aspects of the work, including controlling prices or rates for services and the marketing of the worker’s products or services.

Oversight for the sole purposes of complying with specific applicable federal, state, tribal, or local laws or regulations does not indicate control over the worker for purposes of the new rules.

Extent to which the work performed if an integral part of the employer’s business looks at whether the work that is performed is an integral part of the company’s business, such as whether the work is “critical, necessary, or central” to the business, which would suggest an employee. If the work is not “critical, necessary, or central” then this factor suggest independent contractor status.

Skill and initiative looks at whether the worker uses specialized skills and whether those skills contribute to business-like initiative.  This factor supports a finding that a worker is an employee where the worker does not use specialized skills or is dependent on training from the company.  The use of specialized skills alone, however, does not indicate an independent contractor relationship. The specialized skills must be used in connection with “business-like initiative.”

Additional factors may include any factors that DOL believes would indicate whether the worker is in business for themselves or are economically dependent on the potential employer for work.

PENALTIES FOR MISCLASSIFICATION OF WORKERS.

If a worker is an employee, rather than an independent contractor, they are entitled to the minimum wage, overtime, and other rights of employees.  Generally employers are required to track the hours worked by non-exempt employees, while independent contractors often are paid by the project and do not track hours.  If DOL determines that a worker is misclassified, then they will calculate any minimum wage or overtime that should have been paid.  Overtime can result in hundreds of thousand of dollars of back wages for misclassified workers.  DOL can also impose additional civil monetary penalties.

SUMMARY AND TIPS

Companies using independent contractors should analyze their independent contractor relationships under the new rules to help ensure that the individuals are properly classified.  Companies should ensure that they have written independent contractor agreements and obtain from the independent contractor a Form W-9, proof of workers’ compensation or other insurance, business cards, advertisements, or website where the contractor advertises services to others, copies of business licenses, records of negotiations over rates of pay, etc. to help demonstrate that the fix factors of the economic reality test favor independent contractor status.

The attorneys at PSGM Law are available to assist companies to review their wage and hour compliance and independent contractor relationships.  We can assist with analyzing workers to identify the correct classification as independent contractor or employee and draft independent contractor agreements to help highlight factors that support independent contractor relationships.

By Danny Marks and Julie Pace 

I. THE CORPORATE TRANSPARENCY ACT (“CTA”) WENT INTO EFFECT ON JANUARY 1, 2024.

The Corporate Transparency Act (“CTA”) went into effect on January 1, 2024, and it requires primarily smaller businesses to submit a report to the Financial Crimes Enforcement Network (“FinCEN”) containing personal information about the reporting company and the company’s “beneficial owners,” among other things.  It is important to properly and timely submit to avoid potential civil and criminal liability.

II. WHAT IS THE CTA. 

The CTA, in a nutshell, requires small companies to disclose information about the company, the company’s beneficial ownership, and the company’s applicants.  The CTA was enacted so that the federal government could obtain certain information about the ownership of smaller companies.  It is intended that the CTA will improve transparency in smaller businesses and improve national security by preventing money laundering, stopping other unlawful acts, etc.

III. MANY SMALLER BUSINESSES ARE SUBJECT TO THE CTA.

Every non-exempt business in the United States must file a Beneficial Initial Report (“BOI Report”), unless they are exempt.  It is important to note that the CTA’s applicability does not discriminate based on the type of entity.  In other words, unless exempt, the CTA applies to corporations, limited liability companies, etc.

There are more than 20 exemptions to the CTA, most of which are reserved for businesses that are subject to significant regulations, such as publicly traded companies, banks, etc.

There is an exception for “large operating companies,” which are companies that (1) have more than 20-full time employees in the United States, (2) operate at a physical office within the United States, and (3) file a tax return in the previous year that reflects more than $5,000,000 in gross receipts or sales.

IV. WHAT MUST BE DISCLOSED.

The reporting company must disclose the name of the business, the names under which it does business, state of formation, its address, and taxpayer identification number.

Information about the company’s beneficial owner(s) must also be disclosed, including their legal name, birthday, address, unique identifying number, such as a number from a passport or driver’s license, and an image of the document that contains the unique identifying number.   A beneficial owner includes, but is not limited to, one who owns or controls 25% of the company.

Information about the company’s applicant(s) also must be disclosed for reporting companies that are formed on or after January 1, 2024.  A company applicant includes the person who forms the entity with the applicable state agency and the individual who is responsible for directing the formation of the entity.

Certain agencies will have access to the reports.  However, neither the public nor the Arizona Corporation Commission will have access to the reports.

V. THE DEADLINES.

The deadline for submitting the Beneficial Initial Report (“BOI Report”) depends on the date on which the company is formed:

1. A company that is formed before January 1, 2024, must file its initial BOI Report by January 1, 2025.
2. A company that is formed between January 1, 2024, and January 1, 2025, or later, must file its BOI Report within 90 days after the date it is formed.
3. A company that is formed on or after January 1, 2025, must submit its BOI within 30 days of formation.

VI. THERE ARE CONSEQUENCES IF A BUSINESS FAILS TO TAKE ACTION. 

The CTA provides for civil and criminal penalties against anyone who willfully (1) fails to report or update a reporting company’s BOI and (2) providing false or fraudulent BOI.   The CTA provides for civil penalties that include a daily fine of $500 for a continuing violation.  Willful violations of the CTA can result in criminal fines of up to $10,000 and imprisonment for up to two years.

VIII. HOW WE CAN HELP.

PSGM Law can work with businesses to determine whether they are subject to the reporting requirements and with the submission as well as assisting with annual reports, annual meetings, business planning, and other corporate governance matters.

By: Daily Independent | December 20, 2023
Photo Credit: INDEPENDENT NEWSMEDIA/BRENT RUFFNER
Customers at Elevate Coffee Co. in the Norterra neighborhood of Phoenix. There could be some Valley businesses unaware of a minimum wage increase that takes effect on Jan. 1.

Arizona’s minimum wage is heading up again, and local businesses are going to have to prepare.

There could be some Valley businesses unaware of the 3.6% increase in the minimum wage that takes effect on Jan. 1, according to Employment Attorney Julie Pace.

The increase is the result of Arizona voters in 2016 approved Prop. 206 — an initiative that requires employers to give minimum wage workers a pay raise on Jan. 1 — to $14.35 per hour, according to the Industrial Commission of Arizona.

With the state’s minimum wage increase related to inflation rates and attempting to keep pace with the rise in Arizona’s cost of living, the increase going into 2024 is less than that which came in 2023 when the rate rose from $12.80 to the current $13.85 per hour, an 8.2% increase.

“I think (business owners) are going to be surprised,” Pace said.

Hotels, restaurants and the construction industry are among the trades effected by the proposition otherwise known as the Fair Wages and Families Act, Pace said.
At a restaurant, the owner might have to increase prices of meals to help cover labor costs, Pace said.

CLICK HERE TO READ THE FULL ARTICLE.

OSHA 300A Summary to be Posted by February 1, 2024

By Julie A. Pace, David A. Selden, Heidi Nunn-Gilman

I.  ARIZONA MINIMUM WAGE INCREASE JANUARY 1, 2024.

Don’t forget that Arizona minimum wage increases to $14.35 per hour beginning January 1, 2024.  This is an increase of $0.50 per hour from the 2023 minimum wage, based on the cost-of-living adjustment.

II. DON’T FORGET MINIMUM WAGE AND OVERTIME FOR NON-EXEMPT WORKERS, INCLUDING PIECE RATE AND DAY RATE WORKERS.

Remember that non-exempt employees, including hourly, daily, or piece rate workers, are required to receive both minimum wage and overtime.  Employers must require that all non-exempt workers keep track of the hours they work so that the employer can ensure that it is meeting the minimum wage and overtime requirements.

For example, for piece rate employees, to ensure that the piece rate worker receives minimum wage, divide the total piece rate paid for the week by the hours paid during the week.  If the average is lower than $14.35 per hour, then the employer is required to pay the difference between the piece rate and minimum wage.  For example, if a piece rate worker works 40 hours and earns $600, this is an average of $15 per hour, which exceeds minimum wage.  If the piece rate worker works 40 hours and earns $400 piece rate, this is an average of $10.00 per hour, which is less than the required minimum wage.  The employer must pay the worker $574 for the week, 40 hours times $14.35 per hour.

If the piece rate worker earned $800 piece rate and worked 50 hours, the piece rate workers is entitled to 10 hours of overtime, paid at ½ the regular rate.  To calculate the regular rate, divide the piece rate by the hours worked then divide by 2 to obtain the half-time overtime premium ($800 / 50 = $16.00 /2 = $8.00).  The employer must pay the piece rate worker $80 in overtime ($8.00 hour x 10 hours overtime), in addition to the $800 piece work, for a total of $880.00.

III. POST THE OSHA 300A SUMMARY BY FEBRUARY 1, 2024.

All covered employers must post the OSHA 300A summary from February 1 to April 30 of each year.  The OSHA 300A form summarizes any injuries or illnesses that occurred at the workplace for the prior year, as recorded on the OSHA 300 log.

The OSHA 300A must be signed by a Company executive.  It must be posted in a conspicuous place, generally with the other employment law posters, at the location covered by the report.  Generally, each physical location for the Company must have a separate OSHA 300 log and OSHA 300A report.

Establishments in certain high-risk industries with 20 or more employees and most establishments that employ more than 250 employees must report OSHA 300A information electronically by March 2 of each year.

The OSHA 300A and related records must be maintained by the employer for a minimum of five (5) years.  Failure to post and/or maintain the required records can lead to violations and penalties.

IV. SUMMARY.

The attorneys at PSGM Law are available to assist companies to review their wage and hour compliance and design and implement policies and procedures to promote compliance with a view towards business needs and success.

OSHA is also increasing enforcement and penalties.  It is important for employers to provide a safe workforce in compliance with OSHA regulations.  With experience in defending tens of thousands of OSHA citations, including approximately 365 fatalities, PSGM Law has the knowledge to assist employers of all sizes and in all industries.

Great opportunity this past week for #PSGMLaw with firm partner Julie Pace and Amber Pappas CIT, CSP President of Safety Help Today presenting at the American Society of Safety Professionals | Arizona Chapter regarding OSHA Inspection, Fatalities, and Top 5 OSAH Interview Questions and Mistakes. We always enjoy getting out there and talking with our beautiful community. Learn more about the great work our team is doing at PSGMLAW.com!