$1.8 Million Citation for Independent Contractor Misclassification

Many in the home care industry mistakenly pay hired caregivers as independent contractors.

Case in point: the Labor Commissioner has cited two related agencies, Angel Connection Nursing Care and Angel Connection Nursing Services of Long Beach – and their owners individually – $1.8 million for misclassifying 66 employees as independents.

The state found the companies failed to pay minimum wage, failed to withhold payroll taxes and provide proper wage statements, and did not have workers’ compensation coverage.

Triggered by reports from the Pilipino Workers Center and Bet Tzedek Legal Services, the Labor Commissioner assessed $213,163 unpaid minimum wages, $283,058 liquidated damages, $329,515 overtime, $14,123 contract wages, and $181,534 interest, totaling $1,021,393 due to workers.  The citations added $330,000 penalties for misclassification, $171,000 for the unitemized wage statements, and $357,046 for violating a stop order for the lack of workers compensation.

The Commissioner found that Angel Connection “exercised control over the wages, hours and working conditions of the misclassified employees.”  Such control is a hallmark of employee – and not independent contractor – status.

Commissioner García-Brower stated: “When workers are misclassified as independent contractors, there is a damaging domino effect that impacts all levels of our economy. In this case, caretakers were systematically denied minimum wage, overtime, and other legally required working conditions.”

TAKE-AWAYS:  Independent contractor classification is unfounded where hiring agencies  exercise control over the caregiver’s hours and the work to be performed.  The above assessment illustrates the vital importance of properly classifying such workers under state standards, preferably with assistance of knowledgeable employment counsel.

See also:

• Cautionary Tale Episode 57: Car Wash Dusted: Employer Hit with $800,000 “Wage Theft” Citation (May 18, 2022)
• Cautionary Tale Episode 48: Violating Employment Laws Can Prove Terminal: Labor Commissioner Revokes Garment Manufacturer’s License (January 6, 2022)
• Cautionary Tale Episode 44: Fined Dining: Restaurant Must Eat $1.6M Bill for Labor Violations (August 26, 2021)

For assistance on such issues, please contact one of our attorneys Tim Bowles, Cindy Bamforth or Helena Kobrin.

Helena Kobrin
January 20, 2023