I was recently asked the following question during a presentation to a group of small business owners: “How vulnerable are we as employers?” The quick answer is, “Very.” As some of you have likely found out, “Anyone can sue anyone for anything.” As employers, we are also at the risk of fraudulent claims for worker’s compensation, unemployment and employment actions such as terminations. The best way to minimize our risks is to know the relevant laws regarding hiring, wage and hour and disciplinary action including terminations. Of course, knowing the laws only works if you follow the laws! It has become increasingly prevalent in the past few years to consider any possible means for reducing cost. Some that can make an employer more vulnerable are: Not verifying I-9 status – this is the employment eligibility verification form that has been in use since the 80s. Considering employees as Independent Contractors. Before classifying someone as an independent contractor, be sure you review the criteria from the IRS and from CA. Paying under the table, which has become much more prevalent since unemployment benefit periods have been extended. This applies to both all pay under the table as well as partial pay such as overtime or bonuses. Employees may readily agree to “under the table” pay…until they get upset about something else such as a layoff or a termination. “Better safe than sorry” remains the best practice for employers of all sizes.
Julia Aguilar Principal, CSP