New California Labor Code 226.8 increases the penalties for employers who willfully misclassify their employees as independent contractors. This new law also prohibits charging an independent contractor a fee or making deductions from the compensation of that person where the fee or deduction would violate the law absent the misclassification of the employee. For example, charging a person a fee for supplies or materials which would be subject to a normal expense reimbursement if that person were classified as an employee. This new law came from Senate Bill 459, which also imposes a series of civil penalties on employers for misclassification ranging from $5,000 dollars per violation all the way up to $25,000 for pattern or practice violations. The law also requires the posting of a notice in the business where a violation is found. Senate Bill 459 also added California Labor Code 2753 which imposes liability on non-party consultants who knowingly advise an employer to treat someone as an independent contractor to avoid employee status. For more more information on this topic read the BASF Employer Independent Contractor Misclassification Memo.
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