Last week, California and The U.S. Department of Labor agreed to work together to go after employers who misclassify employees as independent contractors. My colleague Keith Reinfeld wrote about it here. California is the 12th state to join with the DOL in this regard. But there’s no word on how the feds and the states are working together.
This remains an area where employers face significant exposure. As Kent Bradbury wrote late last year, recently enacted California Senate Bill 459 allows the state to impose civil penalties of $5,000 to $25,000 for "willful" misclassification of employees.
While these classifications face increased government scrutiny, the underlying decisions remain challenging. The states and federal government and the various agencies within those jurisdictions each use slightly different tests to determine an individual’s status.
If you have independent contractors doing the same work as your employees, or working exclusively for your company, on your premises, using your equipment, then it’s time to evaluate whether those classifications are proper. If you wait for the government or a group of disgruntled workers to raise the issue, the costs of fixing things goes up tremendously.