BILL ANALYSIS �
SB 459
Page 1
SENATE THIRD READING
SB 459 (Corbett)
As Amended September 2, 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 misclassification" is
defined as avoiding employee status for an individual by
voluntarily and knowingly misclassifying that individual as
an independent contractor); and,
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b) Charging an individual who has been willfully
misclassified 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)Authorizes the Labor Commissioner to issue a determination
that a person or employer has violated the provisions related
to willful misclassification.
5)Authorizes the Labor Commissioner to issue a citation to
assess specified damages in addition to any other penalties or
damages otherwise available at law.
6)Authorizes the Labor Commissioner to enforce these provisions
administratively or in a civil suit.
7)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 one-year period of time.
8)Provides that if a licensed contractor engages in the
violations specified above that resulted in debarment, a
certified copy shall be sent to the Contractor's State License
Board, which shall initiate disciplinary action against the
licensee within 30 days.
9)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 similar
line of business.
10)Provides that a person who knowingly advises an employer to
treat an individual as an independent contractor and to avoid
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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.
11)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 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
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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: 0002582