The penalties for misclassifying an employee may include civil fines, unpaid wage penalties, interest charges, and fines and penalties from the Internal Revenue Service.
What Types of Penalties Do California Employers Face for Misclassifying Employees?
Employers that intentionally misclassify employees may be subject to civil penalties that include:
- $100 for the first violation for the failure to pay full wages, for each employee.
- $200 for each subsequent failure to pay violation, for each employee, and an additional 25% fine of the amount unlawfully withheld.
The fine can range between $5,000 and $15,000 per violation, and if there is a pattern of willful misclassification, the courts can fine employers an additional $10,000 to $25,000.
Wage Statement Penalties for Employee Misclassification in California
The California Labor Code requires all employers to produce and provide itemized wage statements to hourly workers.
When employees are misclassified as independent contractors, these records do not exist.
In these cases, the penalties are three-fold:
- The courts may order the employer to pay fines.
- The workers can sue for failure to comply.
- Failure to meet wage statement and recordkeeping requirements in the state of California is also a crime that can be charged as a misdemeanor and result in up to a year in jail and fines of up to $1,000.
If an employer owes a misclassified employee money, the court can require the company to pay interest on the amount that it owes the worker, as well as his or her legal fees and court costs if they were forced to sue because of their misclassification.
Criminal and Financial Penalties from the IRS
The IRS can require a California employer to pay tax penalties when it determines a worker is an employee, and not an independent contractor. This is true whether the misclassification was intentional or accidental.
If the IRS finds that an employer or worker willfully enters an independent contractor arrangement to evade taxes, it is a crime that can be charged as a felony.
The penalties include up to five years of prison time and up to $100,000 in fines.
Contact the Leichter Law Firm, APC Employee Misclassification Attorney in Los Angeles, California
If you believe your employer purposefully misclassified you as an independent contractor, instead of an employee, contact Aryeh Leichter, the Leichter Law Firm, APC founder and employment law attorney in Los Angeles County today to discuss the legal remedies that may be available for your unique workplace circumstances today, starting with a free consultation by calling 818-915-6624 or contacting the firm online.