On October 9, California Governor Jerry Brown signed into law Senate Bill 459, which prohibits employers from willfully misclassifying workers as independent contractors. The new law, designed to force businesses to rethink their relationship with independent contractors, imposes civil penalties between $5,000 and $25,000 per violation and requires businesses to publicize findings of violations of the new law on their company websites.

The Scope of the Law

The legislation is reflected in newly added Labor Code sections 226.8 and 2753. Section 226.8(a) sets forth the law's objective, stating that it is unlawful for any person or employer to willfully misclassify an individual as an independent contractor. Section 226.8(a) also prohibits businesses from charging fees or making any deductions from compensation for any purpose, including goods, materials, space rental, services, licenses, repairs, maintenance, and fines, when such fees or deductions would have been impermissible had the individual not been misclassified.