Robert Tollen Quoted in California Executive "Proper Classification of Workers is Critical, But no Exact Science"

Robert Tollen was quoted in the article, “Proper Classification of Workers is Critical, But no Exact Science,” published April 24, 2008 by California Executive.

The article notes that businesses can save significant payroll costs and avoid most labor-related liabilities by working with independent contractors instead of employees. Misclassification of workers, however, can carry severe penalties and expose businesses to costly legal actions.

Robert noted that the “mechanical listing” of factors by the Internal Revenue Service and the Employment Development Department, the two main government bodies that enforce worker classification in California, often fail to get at the heart of the matter. He observed that, “A much more practical test is for a company to ask itself whether, regardless of the EDD’s [or IRS’s] list of factors, the company is assigning a worker to engage in work that is a normal part of the company’s business.”

Robert noted that the cost savings associated with hiring an independent contractor instead of an employee are the very same costs that could bite them later if an independent contractor is later found to have been an employee. Robert further remarked that an employee incorrectly classified as an independent contractor who is injured on the job is entitled to damages but is not limited by the workers’ compensation schedule and may include punitive damages. Further, he pointed out that companies facing such a scenario may also be liable for back wages, back taxes, payment for missed meal breaks, and other costs. Robert observed, “Suits might not come for, say, three years after the worker started work. In the meantime, the employer has not reserved for such expenses… Being required to pay them all in one lump sum at the end of a costly lawsuit can be crippling.”