BILL ANALYSIS �
SB 459
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SENATE THIRD READING
SB 459 (Corbett)
As Amended August 15, 2011
Majority vote
SENATE VOTE :24-12
LABOR & EMPLOYMENT 4-2 JUDICIARY 6-3
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|Ayes:|Swanson, Allen, Furutani, |Ayes:|Feuer, Atkins, Dickinson, |
| |Yamada | |Huber, Monning, |
| | | |Wieckowski |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Morrell, Beth Gaines |Nays:|Wagner, Beth Gaines, |
| | | |Jones |
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APPROPRIATIONS 12-5
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|Ayes:|Fuentes, Blumenfield, | | |
| |Bradford, Charles | | |
| |Calderon, Campos, Davis, | | |
| |Gatto, Hall, Hill, Lara, | | |
| |Mitchell, Solorio | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Harkey, Donnelly, | | |
| |Nielsen, Norby, Wagner | | |
| | | | |
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SUMMARY : Enacts a number of provisions of law related to the
classification (or misclassification) of individuals as independent
contractors. Specifically, this bill :
1)Makes it unlawful for any person or employer to engage in any of
the following activities:
a) Willful misclassification of an individual as an independent
contractor. ("Willful" is defined as voluntarily and knowingly
to avoid employee status for the individual); and,
b) Charging an individual who has been willfully misclassified
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a fee, or making any deductions from compensation for any
purpose, where the employer would have been in violation of the
law if the individual had not been misclassified.
2)Provides that any person found guilty of the above violations
shall be assessed a civil penalty of not less than $5,000 and not
more than $15,000 for each violation.
3)Provides that any person found guilty of a repeated pattern or
practice of these violations shall be assessed a civil penalty of
not less than $10,000 and not more than $25,000 for each
violation.
4)Provides that a person or employer that violates the above
provisions shall be required to post a notice on its website (or
at the worksite if no Web site exists) that sets forth specified
information for a two-year period of time.
5)Provides that if a licensed contractor engages in the violations
specified above, a certified copy shall be sent to the
Contractor's State License Board, which shall initiate
disciplinary action against the licensee within 30 days.
6)Provides that any penalty issued under this bill shall be in
effect against any successor that has one or more of the same
principals or officers and is engaged in the same or equivalent
trade or activity.
7)Provides that a person who knowingly advises an employer to treat
an individual as an independent contractor and to avoid employee
status for that individual shall be jointly and severally liable
if the individual is found not to be an independent contractor.
This provision does not apply to: a) a person who provides advice
to his or her employer; or, b) a licensed attorney who provides
legal advice in the course of the practice of law.
8)Makes other related and conforming changes.
FISCAL EFFECT : According to the Assembly Appropriations Committee,
this bill will result in minor and absorbable costs to the
Employment Development Department to implement this measure.
COMMENTS : This bill is the latest attempt in an ongoing effort to
develop legislation to combat the misclassification of employees as
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independent contractors. Legislation in recent years has addressed
most of the individual components contained in this bill. However,
this bill takes a more comprehensive approach and attempts to
address each of these elements in one measure.
The sponsors of this bill argue that when a worker is misclassified,
he or she loses more than just minimum wage and overtime
protections. He or she has no workers' compensation coverage if
injured on the job, no right to family leave when a loved one is
ill, and no unemployment insurance if he or she loses his or her
job. If he or she does not like the working conditions and tries to
join with others to ask for more pay or a safer workplace, he or she
has no legal right to organize or join a union and no protection
against employer retaliation. They contend that the use and abuse
of independent contractors poses a serious threat to workers' rights
and undermines working conditions for all workers. It creates an
unfair playing field for all the responsible employers who continue
to honor their lawful obligations to their employees.
The sponsors argue that the only way to effectively stop
misclassification is to create real economic disincentives. This
bill will help enforcement efforts and act as a deterrent and, in
doing so; it will level the playing field for responsible businesses
and protect vulnerable workers.
A coalition of employer groups opposes this bill, arguing that
determining the status of a person as an independent contractor
versus an employee is daunting for many businesses because the
process is so ambiguous and complex and provides no certainty for
decision-making. Instead of imposing new requirements and
liabilities regarding independent contractors, the process should
look to ways in which to improve the ability of business to make
accurate and sound business decisions regarding the classifications
of their employees.
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091
FN: 0001861
SB 459
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