Sen. Sheila Kuehl just raised a good question, which is how ABx1 1 would handle businesses that “misclassify” or “reclassify” their workers as “independent contractors” in order to avoid the employer mandate.
This is also known as the underground economy.
SEIU’s Beth Capell responded:
Existing law – Unemployment Insurance Code Section 2101 – already addresses issues surrounding the “underground economy.’’ Specifically, the law says businesses cannot “willfully make a false statement or representation’’….that would reduce a worker’s “benefit or payment.’’
An employer that does so, would be fined $20,000 and could spend a year in prison, as provided under UI Code Section 2122.
California’s Economic Development Department has a division specifically dedicated to pursuing and punishing businesses that evade payroll obligations, and in recent months has pursued, arrested, fined, and imprisoned a number of businesses. ABx1 1 would be one of those obligations.
Additionally, Capell added that Kuehl’s own SB840 did not include penalty provisions, but would also — if passed — be an employer obligation enforceable under this code section.