California Law Provides Stiff Penalties for Employers Misclassifying Employees as Independent Contractors
California Labor Code §226.8 makes it unlawful to “willfully” misclassify workers as independent contractors. “Willful” misclassification means avoiding employee status for a worker by voluntarily and knowingly misclassifying that individual as an independent contractor. The penalties for violations of this law range anywhere from $5,000 to $15,000 per violation, in addition to other fines or penalties permitted by law. If the employer is found to have engaged in a “pattern and practice” of violation Section 226.8, the employer is subject to a civil penalty of $10,000 to $25,000 per violation.
Notably, Section 226.8 penalties are in addition to other damages and penalties available to workers who have been misclassified as independent contractors, such as wage statement penalties, minimum wage damages and penalties, overtime wage damages, meal and rest period penalties, reimbursement of business expenses, employer’s portion of OASDI, attorneys’ fees and costs, and other pendent penalties.