by Michael S. Kun, Eric A. Cook, and Jennifer A. Goldman
California Governor Jerry Brown has signed two employment-related bills into law, raising the stakes for employers doing business in California. The two laws, which increase the penalties for employers that wrongly classify employees as independent contractors or engage in “wage theft,” both go into effect on January 1, 2012.
Misclassification of Workers as Independent Contractors
The first of the new laws, SB 459, directly impacts employers that classify workers as independent contractors. Referred to by critics as the “Job Killer Act,” the legislation adds Sections 226.8 and 2753 to the California Labor Code (“Labor Code”). Section 226.8 prohibits the “willful misclassification” of an individual as an independent contractor, and also prohibits an employer from charging fees to a misclassified individual for items that an employee is not normally required to purchase, such as equipment, space rental, services, or licenses. Section 2753 imposes joint and several liability on any person who, for money or other valuable consideration, knowingly advises an employer to treat an individual as an independent contractor simply to avoid the employee designation. (Attorneys who advise employers are exempted from Section 2753.)