EmploymentQuestion 242 of 1632

Under Labor Code §226.8, willful misclassification of an employee as an independent contractor can result in a civil penalty of:

a.$1,000 per violation, with no increase for repeated conduct
b.A warning letter for a first offence, with penalties only after that
c.Up to $1,000 per violation, plus loss of the licence for one year
d.$5,000 to $15,000 per violation, more for a pattern or practice

Explanation

Labor Code §226.8(b) authorises $5,000 to $15,000 for each willful misclassification, and §226.8(c) raises the range to $10,000 to $25,000 per violation where the employer engages in a pattern or practice. There is no warning-letter grace period: the penalty attaches to the first willful violation. Figures in the hundreds or at a flat $1,000 belong to other Labor Code penalty scales. And the licence consequence is not automatic revocation for a year - §226.8(d) sends a certified copy of the order to the CSLB, which must initiate disciplinary action within 30 days, while §226.8(e)-(f) make the violator post a notice of the violation for one year.

Law Reference: Labor Code §226.8(b), §226.8(c), §226.8(d), §226.8(e)-(f)

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Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)
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