On June 23, 2011 bill SB 459 cleared another hurdle towards becoming law by passing the California Assembly Labor Committee by a vote of 4 to 2 to make its way to the Judiciary Committee.
- Makes it unlawful to willfully misclassify an individual as an independent contractor. If found guilty a company would have civil penalties of no less than 5K and no more than 10K per occurrence. If found guilty of repeated violations the result could be as much as 25k for each violation – willful is defined as with voluntary intent.
- The company must maintain records by completing a document developed by the EDD for each independent contractor retained.
- A notice indicating the individual will be engaged as an independent contractor
- What EDD factors were included to determine the individual is an employee or an independent contractor
- A statement explaining the impact the independent contractor status has on tax obligations and eligibility for labor and employment protections
- Notice to the individual that they can seek advice from EDD or the Labor Commissioner regarding whether they were properly classified
- Provides that any person who knowingly advises an employer to treat an individual as an independent contractor, to avoid employee status, shall be jointly and severably liable if the individual is found not to be an IC. (Lawyers and advice received internal to your company are exempt.)
This bill is just one in a long list of bills proposed by various states as well as the U.S. Senate (bill S3254) to combat the misclassification of individuals as independent contractors.
With all the recent legislation and attention around independent contractors and the focus on documentation requirements that are included you need a partner like SourceRight Solutions who can help you navigate through the often grey waters of independent contractor compliance.