As of January 1, 2012, California will be enacting stiff penalties for the willful misclassification of employees as independent contractors. The new law, titled SB 459, seeks to crack down on businesses making these false claims in order to avoid wage withholdings, employment taxes, unemployment insurance, workers’ compensation, and liabilities for pensions and fringe
benefits. If you have any questions regarding the classification of employees versus independent contractors, we strongly encourage you to consult with legal counsel experienced in employment practice matters. Further information can be found on the Department of Labor Standards Enforcement website. Penalties for misclassification may include:
- California’s Labor and Workforce Development Agency can fine you for “willfully misclassifying” an employee from $5,000 to $15,000 per violation.
- The penalty goes up to $25,000 per violation if you commit a “pattern and practice” of “willfully misclassifying” workers.
Also enacted January 1, The Wage Theft Protection Act (AB 469) now requires employers to provide a written notice to nonexempt employees at the time of hire in the language of the employee. The notice will include:
- Rates of pay, including overtime rates and basis on which wages are calculated.
- The designated regular pay day.
- Allowances, if any, claimed as part of the minimum wage, including meal or lodging allowances.
- The name of the employer, including any “doing business as” names used.
- The physical address of the employer’s main office or principal place of business and, if different, a mailing address.
- The employer’s phone number.
- The name, address and phone number of the employer’s workers’ compensation carrier.
- Other information the Labor Commissioner deems material and necessary. For further information, please visit the Labor Commissioner’s AB 469 FAQ page.
