New California Law Penalizes Employers Who Misclassify Employees as Independent Contractors
In the latest effort to crack down on the misclassification of employees as independent contractors, California Governor Jerry Brown recently signed SB 459, a bill prohibiting any person or employer from “willfully” misclassifying workers as independent contractors. The bill also prohibits employers from charging a misclassified worker a fee or deducting from his pay for any costs related to his employment i.e., equipment, services, repairs, or fines. Employers who violate the new law will be fined between $5,000-$15,000 for each violation, in addition to any other penalties or fines. Employers engaged in a “pattern or practice” of violations are subject to fines up to $25,000 for each violation.
In addition, an employer who violates the new law must post a notice to employees on its Internet website, or, if it does not have a website, another prominent area. The notice must provide the following information: (1) the employer violated the law; (2) the employer changed its business practices to avoid committing further violations; (3) the contact information for the state Labor and Workforce Development Agency to report other violations; and, (4) the employer was ordered to post the notice. SB 459 reinforces the importance of appropriately classifying independent contractors under California and federal law. Employers should also be aware of the mine field of other violations under various laws with respect to misclassification of independent contractors.
