The Perils of Misclassifying Your Employees

Are you misclassifying the people that work for you?  The improper characterization of employees as independent contractors is, and has been, a major issue in California.  The potential civil penalties, not to mention the tax implications, are costly.   Well, those penalties just got worse.

Senate Bill 459 has added sections 226.8 and 2753 to the California Labor Code.  The first statute adds a potential penalty of $5,000 to $25,000 per violation for “willful misclassification” of an individual as an independent contractor.  The second statute provides that paid advisors of an employer (excluding attorneys and employees of the company) who “knowingly advise” employers to misclassify workers are jointly and severally liable for any penalties imposed on the employer as a result of the misclassification.

Perhaps more unusual is the requirement that employers who violate the law be required to post a “prominent” notice on their public website, stating, among other things, that the employer has “committed a serious violation of the law” by willfully misclassifying employees, and directing other employees who believe they have been wrongfully misclassified to contact the California Labor and Workforce Development Agency. Given that the vast of majority of businesses nowadays have websites, this posting requirement is something that could have serious and far-ranging effects on a business.  Moreover, if the business does not have a website this posting still has to be made “in a prominent and accessible” location at the employer’s physical location.

Do not take a chance on misclassifying employees.  If you have any questions on employment law do not hesitate to contact our offices at (916) 565-8161.  You can also obtain more information on employment law generally at:

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