Hunton Employment & Labor Perspectives

On October 9, 2011, California Governor Jerry Brown signed SB 459, legislation that creates new and significant civil penalties for employers that misclassify employees as independent contractors. The newly enacted Section 226.8 of the California Labor Code authorizes civil penalties under two circumstances: (1) “Willful misclassification of an individual as an independent contractor;” and (2) “Charging an individual who has been willfully misclassified as an independent contractor a fee, or making any deductions from compensation, for any purpose . . . .” In either case, the “person or employer” responsible for the violation “shall be subject to a civil penalty of not less than five thousand dollars ($5,000) and not more than fifteen thousand dollars ($15,000) for each violation, in addition to any other penalties or fines permitted by law.” Moreover, if there is a determination that a person or employer has engaged in “a pattern or practice” of violations, “the person or employer shall be subject to a civil penalty of not less than ten thousand dollars ($10,000) and not more than twenty-five thousand dollars ($25,000) for each violation.”