Written by By Galen T. Shimoda and Justin P. Rodriguez
While there may be a host of reasons why an employer would attempt to classify individuals performing work for them as independent contractors, it cannot be denied that this topic has generated a lot of litigation and legislation over the past few years. The down turn in the economy generated many more instances where people were being treated as independent contractors even though the level of control over them was similar to that of your typical employee. Of course, an employer’s control over an individual remains a primary focus of determining whether an individual has been misclassified as an independent contractor. However, the California legislature has increased the range of liability and recoverable civil penalties a person can collect in addition to any unpaid wages and penalties they otherwise would be entitled to.
Under California Labor Code section 2753, individuals beyond your employer can be liable for advising them that you should be classified as an independent contractor in certain circumstances. This has potential to include third party human resources companies and payroll providers. The benefit of this recent addition to the Labor Code is that now an employee has an even greater chance of recovering all monies and penalties owed to them.
This works in tandem with California Labor Code section 226.8, which provides for civil penalties between $5,000 and $15,000 for the willful misclassification of an individual as an independent contractor and for each time a person willfully misclassified is required to pay a fee or has a deduction from their pay, amongst other things, for any purpose arising out of their employment if it would otherwise be unlawful had the individual been correctly classified. More simply, this can include things like requiring an individual to pay for materials or equipment as part of their job which would otherwise be a reimbursable expense under California Labor Code section 2802. The penalties can be as high as $20,000 per occurrence if it is determined that there is a pattern and practice of willful misclassification. Some non-monetary remedies can include a contractor being subject to discipline from the Contractors’ State License Board and requiring that the employer prominently display a notice identifying the fact that they have engaged in a serious violation of the law.
The practical effect of these two provisions is that employers should be even more cautious about classifying workers as independent contractors. Now all California workers, including the typically misclassified jobs of exotic dancers, truck drivers, landscapers, handymen/maintenance workers, and janitors, have even more ammunition when proving their claims that they should be classified as employees.
If you believe you have been misclassified as an independent contractor or have other potential employment law or personal injury claims that you wish to be evaluated, contact our office.