New California Laws Increase Penalties for Employee Misclassification and Wage Theft

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California Governor Jerry Brown has signed two employment related bills into law, raising the stakes for employers doing business in California. The two laws, which increase the penalties for employers that wrongly classify employees as independent contractors or engage in “wage theft,” both go into effect on January 1, 2012.

Misclassification of Workers as Independent Contractors

The first of the new laws, SB 459, directly impacts employers that classify workers as independent contractors. Referred to by critics as the “Job Killer Act,” the legislation adds Sections 226.8 and 2753 to the California Labor Code (“Labor Code”). Section 226.8 prohibits the “willful misclassification” of an individual as an independent contractor, and also prohibits an employer from charging fees to a misclassified individual for items that an employee is not normally required to purchase, such as equipment, space rental, services, or licenses. Section 2753 imposes joint and several liability on any person who, for money or other valuable consideration, knowingly advises an employer to treat an individual as an independent contractor simply to avoid the employee designation. (Attorneys who advise employers are exempted from Section 2753.)....

The Wage Theft Prevention Act

The second new law is AB 469, also known as the Wage Theft Prevention Act of 2011 (“WTPA”). For employers with operations in New York, the WTPA may appear familiar, as California based its WTPA on similar legislation passed in New York last December. (See Act Now Advisory: “Governor Paterson Signs Overhaul of New York State Labor Law”.) Under the WTPA, Section 2810.5 was added to the Labor Code. As of January 1, 2012, certain employers must provide each new non-exempt employee with a written notice at the time of hiring, in the language that the employer normally uses to communicate employment-related information, which contains the following...

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Topics:  Independent Contractors, Misclassification, Penalties, Wage Theft Prevention Act, Wages

Published In: Administrative Agency Updates, Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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