Hospitality Industry Employment Risks: California Hotels Must Have Comprehensive Corporate Policies To "Manage" Independent Contractors To Avoid "Steep Penalties" For "Willfully Misclassifying Employees"

On October 9, 2011, Governor Jerry Brown signed California Senate Bill 459 (“SB 459”), which adds sections 226.8 and 2753 to the California Labor Code. SB 459, effective January 1, 2012, imposes steep penalties on employers who willfully misclassify employees.

In light of federal initiatives and California’s enactment of SB 459, hospitality employers should consider taking various steps to evaluate their existing independent contractor relationships:

• Develop and publish a corporate policy on the engagement of independent contractors and the management of those relationships. As part of this policy, require that approval be obtained from a knowledgeable employee before any independent contractor relationship is established.
• Train employees who manage independent contractor agreements as to how to work with independent contractor relationships.
• Ensure that the company has a well-written independent contractor agreement for each contractor, that it is accurate, complete, and individually negotiated.
• Audit the company’s independent contractor relationships, including a review of any past decisions or determinations concerning independent contractor status.
• Obtain a written legal opinion from counsel regarding the appropriateness of the classification of workers as independent contractors, based on counsel’s understanding of the specific factual situations at issue.

For more:  http://www.seyfarth.com/publications/Five-Key-Labor-And-Employment-Issues-Hospitality-Employers-Need-To-Be-Aware-Of