There are a lot of questions about preventing independent misclassification exposure in San Diego especially as it relates to the recent Dynamex ruling. Many San Diego and southern California businesses rely upon independent contractors as part of their core business strategy. However, the recent California Supreme Court ruling in the Dynamex case creates substantial risk for San Diego employers and business owners who rely upon 1099 workers.
The important takeaways from the Dynamex decision are:
- California law has a new legal presumption that all workers are classified as employees. The legal burden now lies with the provider of work to prove independent contractors are not misclassified employees.
- Independent contractors cannot provide services which are related to the core aspect of the business at hand.
The cost of ignoring the important and game changing developments of Dynamex can not be overstated or exaggerated. Findings by agencies such as the California EDD, the Labor Commissioner or even the IRS have resulted in civil fines of $25,000 per incidence, as well as federal and state income taxes for a look back period of four years. In addition, companies who are found to have misclassified employees as independent contractors must pay unemployment, workers compensation, FICA and other payroll related taxes for the worker during the look back period as well.
You are then required to post a notice in a highly visible location in your business which tells all independent contractors of the misclassification finding. This invites a snow ball effect of additional findings and financial exposure. Finally, plaintiff’s attorneys are heavily advertising to misclassified independent contractors in order to generate new cases based upon unpaid overtime and benefit compensation such as vacation and healthcare for the period they “should have been paid as employees.”
Preventing independent contractor misclassification exposure in San Diego has become a primary focus for the employer defense attorneys at the Watkins Firm. We invite you to contact us or call 858-535-1511 for a free consultation to learn more. Ask about the implications of the new Dynamex ruling, how to become compliant and strategies for transitioning at risk workers without raising unnecessary risk or financial exposure.