The Huffington Post recently reported in an article titled, “Ding Dong: The D.O.L is at Your Door. Now What?,” about the increased emphasis government agencies like the Department of Labor, the IRS, and the Occupational Safety and Health Administration are placing on audits of companies big and small.  Similarly, California’s Department of Industrial Relations and Department of Labor Standards Enforcement are authorized to conduct audits to review proper payroll records, the existence of workers’ compensation insurance, and the potential misclassification of employees as independent contractors, among other items.  Although some of these audits are pre-scheduled with employers, many of them are unannounced, often blind-siding company management.  Penalties imposed by these agencies can be substantial.  See JKH Enterprises, Inc. v. Department of Industrial Relations (Aug. 2006) (affirming $15,000 penalty assessment against company found to have misclassified employees as independent contractors and failing to have workers’ compensation coverage for these workers); Starving Students Inc. v. Department of Industrial Relations (Jan. 2005) (affirming $100,000 penalty assessment against company that obtained workers’ compensation insurance from an insurer unauthorized to write compensation insurance in California).

In light of this increased scrutiny, companies would be well-advised to self-audit their proper classification of employees and independent contractors, their compliance with wage and hour laws, and their maintenance of adequate workers’ compensation insurance.  Companies would also be well-advised to contact experienced counsel in the event of an audit or receipt of a citation; citations can often be appealed or negotiated to accomplish a more favorable resolution for the employer.

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Bernstein & Friedland, P.C. is a boutique employment law firm in Los Angeles specializing in wrongful termination, discrimination, harassment, retaliation, and unpaid wage and overtime matters.  Please visit our website at www.laemploymentcounsel.com to learn more about us.

Polina Bernstein

Polina Bernstein

Polina Bernstein founded Bernstein & Friedland, P.C. in 2009 and is lead litigation counsel at the firm.

Diana Friedland

Diana Friedland

Diana Friedland is a partner at Bernstein & Friedland, P.C. Her practice focuses on employment litigation and counseling.

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