California employers have one more reason to make sure they are not misclassifying workers as independent contractors. Last week, the California Labor Commissioner announced that her agency has entered a new Memorandum of Understanding to partner with the United States Department of Labor to combat what both agencies describe as the growing problem of worker misclassification. As we have previously reported, the Department of Labor has stepped up its efforts to address the worker misclassification issue and has also recently partnered with the Internal Revenue Service on increased enforcement.
In announcing the new partnership with the federal Department of Labor, the California Labor Commissioner referenced Senate Bill 459, which took effect on January 1, 2012, and amends the Labor Code to create civil penalties for misclassifying workers as independent contractors. The civil penalties range from $5,000 to $15,000 per violation and can increase to as much as $25,000, if the employer is found to have engaged in a pattern and practice of willful misclassification. While employers have always faced the possibility of wage and hour liability as well as tax liability for misclassifying workers as independent contractors, Senate Bill 459 introduced additional civil penalties and signals California’s focus on increased enforcement.
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