On October 9, 2011, Governor Brown signed new legislation designed to crack down on the misclassification of employees as independent contractors. SB 459 revises the Labor Code to add section 226.8, which deems it unlawful to engage in “willful misclassification of an individual as an independent contractor.”

“Willful misclassification” for purposes of the law means “voluntarily and knowingly misclassifying” individuals as independent contractors when they should be treated as employees. In addition, the provision makes it unlawful for an employer to charge a misclassified individual fees for items that employees are not normally required to purchase, such as space rental, services, or equipment. Finally, Labor Code section 2753 imposes joint and several liability on any person who, for money or other valuable consideration, knowingly advises the employer to avoid employee status by treating the individual as an independent contractor. Lawyers advising their clients and individuals making recommendations to their own employer are exempt from liability under this section.