Provide wage statements to all employees–even if they can’t give a Social Security number

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in Compensation and Benefits,Human Resources

Under California law, all employees must receive regular wage statements. Employers that “inadvertently” fail to provide pay information might get away with it, but they shouldn’t count on it.

Recently, the Court of Appeal of California considered the meaning of “inadvertently” and upheld penalties assessed against an employer that classified workers as independent contractors when they could not provide Social Security numbers.

Recent case: Heritage Residential Care operates seven health care facilities in California and employs 24 workers. Sixteen of those workers did not have Social Security numbers. The company considered them independent contractors and simply provided them with an IRS 1099 form for each year. It withheld no state or federal taxes from their regular paychecks and did not provide wage statements to those workers.

When a routine audit by the Division of Labor Standards Enforcement unearthed the lack of wage statements, the company was assessed a fine. It appealed, arguing that its failure to provide wage statements was inadvertent; therefore Heritage argued, it should not be liable for the fine.

The court disagreed. It used the most common definition of “inadvertent” and concluded the company acted deliberately when it decided to treat those workers who could not produce a Social Security number as independent contractors. (Heritage Residential Care v. Division of Labor Standards Enforcement, No. H034994, Court of Appeal of California, 2011)

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