What is the cost of independent contractor misclassification for a San Diego employer? What agencies are pursuing San Diego employers, and what is the financial exposure misclassification brings to a local business? The IRS, The US Department of Labor, as well as California’s Labor Board and the Employment Development Department or EDD are focused on “status audits” that focus on the misclassification of “employees” as independent contractors. The government agencies are after substantial back taxes and civil penalties. Your business may be at risk.
The cost of independent contractor misclassification is steep:
- Up to $25,000 in California Civil Penalties for Each Individual Violation
- Back Wages including unpaid overtime, bonuses, retirement contributions and benefit reimbursement for 3 to 5 years or more
- Back payroll taxes including FICA
- California unemployment and workers compensation payments
The cost of independent contractor misclassification for a San Diego employer may result in the closing of the company itself. These financial penalties can threaten the very survival of many small businesses, and many mid-size corporations. The Watkins Firm advises our clients and helps them to come into compliance with new regulations regarding independent contractor classification, and California’s amnesty program. The “rules” for the relationship that constitutes an “independent contractor” relationship have substantially changed in the past few years. A landmark US Supreme Court ruling expanded the designation of “employee” to include the nature of the financial relationship between the parties, as well as the duration of the relationship and the sophistication of the work being performed.
New guidelines also review the importance of the work product provided by independent contractors to the core performance of the company providing the work. These components are in addition to the traditional questions of control over schedule, the provision of tools and the establishment of a price for the work performed.
Protect your company from the substantial financial penalties associated with misclassification. Learn about the cost of independent contractor misclassification for a San Diego employer and whether or not your present independent contracts may fit the “employee” model put forward by the US Supreme Court and California’s Courts. We invite you to review the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.
