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CA Governor Brown Signs S.B. 459 – Severe Penalties for Misclassification of Independent Contractors

Governor Jerry Brown has signed Senate Bill 459. If you weren’t aware of the risks associated with misclassifying an employee as an independent contractor, now is the time to pay very close attention.  The Governor’s support of this bill sends a clear and present message to employers about the focus and attention being placed on the classification of California’s workforce.

California, as well as many other states and federal agencies, has significantly stepped-up their activity and commitment related to employment audits by initiating legislation, increasing penalties and fines,  adding staff and millions in budget, and even formally establishing protocol for the sharing of information between agencies.  California is now being very clear—think twice before classifying a worker as an independent contractor or be prepared to pay the hefty penalties and fines!  The risks are growing exponentially.

In summary, S.B. 459:

  • Prohibits the willful misclassification of workers as independent contractors to avoid the proper classification as employees.
  • Prohibits charging misclassified workers any fees or making deductions from their compensation where those acts would have violated the law if the individuals had not been misclassified.
  • Gives the Labor and Workforce Development Agency authority to assess penalties and take other action against violators.  Requires the Labor and Workforce Development Agency to report violators who are licensed contractors to the Contractors’ State License Board and requires the Contractors State License Board to bring an action against the contractor.
  • Subjects violators to civil penalties of $5,000 to $15,000 per violation in addition to any other penalties or fines permitted.
  • Subjects violators engaged in a pattern of violations to a civil penalty of $10,000 to $25,000 for each violation.
  • Subjects non-lawyers who advise an employer to misclassify a worker to joint liability with the employer.  
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