California Governor signed into law strict employee misclassification legislation.
On October 9th, 2011 California Governor Jerry Brown signed into law strict employee
misclassification legislation. Senate Bill 459, now known as Public Act 706, joins
numerous legislative and administrative efforts at the federal and state levels to
detect and punish the misclassification of employees as independent contractors.
The law prohibits willful misclassification of individuals as independent contractors,
thus avoiding payroll and other tax liabilities. It authorizes an individual to file
a complaint and request the Labor Commissioner to issue a determination for violations.
It directs the Labor and Workforce Development Agency to assess specified civil penalties
and would require the agency to take other specified disciplinary actions against,
persons or employers violating these prohibitions. Penalties for violations of the
law include monetary assessments ranging from $5000 to $15,000 for each violation.
The law includes an amendment to California Code Section 2753 which subjects third
party or non-lawyer consultants to joint liability for knowingly advising an employer
to classify a worker later deemed an employee as an independent contractor and requires
an offending employer to post a notice on its website for one year containing specific
information about its violation of the law. This amendment does not apply to a person
who provides advice to his or her employer or an attorney authorized to practice law
in California or another United States jurisdiction who provides legal advice in the
course of the practice of law.
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