Employee or Independent Contractor? The Risks of Making A Wrong Decision Grow

Say most of your company’s workers are employees, but for certain types of work you bring in independent contractors.  You have been doing this for years, and everybody in your industry handles this kind of work the same way.  You have nothing to worry about, right?

Not necessarily.  Employers use independent contractors instead of employees for a variety of reasons and under a variety of circumstances.  The decision to use independent contractors has never been without risk, including the risk of class action lawsuits.  However, the stakes in California for misclassifying independent contractors were raised significantly when new Labor Code sections 226.8 and 2753 became effective on January 1, 2012.  In addition to possibly having to pay the worker as an employee for past labor (including paying back employment taxes and maybe overtime wages), you now have to be concerned about the potential for additional civil penalties.

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