Blogs

The California Labor Commissioner’s Office announced that it cited a therapy provider $9,041,100 for willfully misclassifying 1,280 employees as independent contractors. The employees included physical, speech, and occupational therapists. The therapy provider is liable for damages of $1,707,350 for failure to provide written notice of sick leave balance/usage, $1,554,850 for the violation of COVID-19 supplemental sick leave provisions, and $256,900 for violations of the paid sick leave recordkeeping requirements.  

The therapy provider also failed to keep itemized wage statements, which resulted in the therapy provider and its CEO being jointly and severally liable for $1,134,500 in damages owed to the employees and a civil penalty of $1,677,500. Additionally, the company is liable for civil penalties of over $2.7 million for misclassifying its employees as independent contractors. Civil penalties for willful misclassification under California law can range from $5,000 to $25,000 per violation.  

In this instance, the investigation was opened after the Labor Commissioner’s Office received a report of a labor law violation – that the company was improperly classifying its workers as independent contractors. As a result of the investigation, the Labor Commissioner audited the company’s records from 2019 to 2022 and identified the willful misclassification and other violations.  

This is an important reminder that California has different and more stringent requirements that must be met to classify a worker as an independent contractor than other states. Employers Council can assist you with the analysis under California law to ensure your workers are properly classified. Please contact us at CAinfo@employerscouncil.org.