In prior blogs, we’ve covered some of the criteria the courts in California rely on to determine whether or not you are properly classified as an employee or an independent contractor. Generally, we’ve concluded that “control of the details”, versus the general outcome, of your job is the primary factor. The IRS has listed 21 other such factors, but for today, we will focus on the next issue arising from this debate: What is the penalty under California Labor Code for misclassification?
A new law went into effect this year, LC 226.8 (see also Labor Code 2753), which provides for penalties of between five and ten thousand dollars for each violation of the law. What is meant by “each violation” is not clear. Does that mean for each employee misclassified a one-time payment, or does it mean “each time” an employee receives a pay check (or rather, actually “doesn’t” receive the proper pay check with deductions) they should get the penalty? How does this law impact what is called “PAGA”, or the Private Attorney General Act, Labor Code 2698, et seq., which provides a waiting time penalty of $200 (after $100 for the initial violation) of each pay period in which the non-payment continues?
Upping the ante for errant employers in California even more, the new law provides that in the event there is a pattern and practice of non compliance, penalties increase to ten to twenty five thousand dollars. Here, we question what amount of evidence is necessary to show a pattern and practice. What if a large corporation with ten divisions properly classifies workers in a couple of divisions, but claims “in good faith” that differences in the other subsidiaries require independent classification? What if the employer relies on legal advise? Does that make it a willful or pattern and practice violation? (And don’t forget the problems in getting advise of counsel into evidence. Each state has different rules on that and its a subject of another blog soon).
If you believe you are a misclassified California employee, please contact us for a discussion of your rights and possible entitlement to damages. We also represent employees,state-wide in class actions on a variety of topics. One of our most interesting (and challenging) is currently a case involving a major aerospace corporation which deducts time off for doctor appointments and the like from their salaried staff. With over 5,000 members of our soon-to-be-certified class, we think this case will clarify some important points in California labor law.