California Dreamin’… of New Compliance Obligations for the New Year! (Part 1)

Contributed by Carly Zuba

With the New Year comes the inevitable slew of new legal obligations for employers.  This post serves as our “Happy New Year!” gift to California employers as it highlights some of the newest obligations that California employers in particular must keep in mind for 2012.

New NLRB Posting Requirement (applies to most private sector employers nationwide): Effective April 30, 2012, employers will be required to post a notice informing employees of their federal labor law rights – including the right to unionize – in all areas where the employer customarily posts notices to employees regarding personnel rules and policies.  The original effective date was January 31, 2012, but it has been postponed at the request of the federal court in Washington D.C. The poster itself as well as a copy of the rule requiring the posting can be found here.

Independent Contractor Classification: The Federal Department of Labor 2012 Budget includes $25 million for a joint Labor-Treasury initiative to strengthen and coordinate federal and state efforts to identify and deter misclassification of employees as independent contractors.  This “Misclassification Initiative” will specifically target industries with misclassification characteristics, such as the construction and technology industries.

Now, more than ever, employers nationwide must ensure that the individuals they are treating as independent contractors are truly independent contractors under the law.  In most states, it boils down to control: if the employer is exerting control over the when, where, and how of the independent contractors’ duties, they will probably be considered employees through the DOL’s eyes.

A new California law provides that a person, who for money or other value, knowingly advises an employer to treat an individual as an independent contractor in order to avoid employee status shall be jointly and severely liable with the employer if the individual is found to be an independent contractor.  Since this new law grants impunity to lawyers, this will primarily apply to HR consultants.

Stay tuned for our second post in this series discussing even more California compliance updates and for a comprehensive analysis of your company-specific 2012 compliance obligations, whether in California or elsewhere, you should always consult with your attorney.