Worker status: penalties and enforcement.

(1) Existing law establishes that, for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration is considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entity's business, and the person is customarily engaged in an independently established trade, occupation, or business. Existing law exempts specified occupations and business relationships from these provisions. This bill would prohibit an employer from being subject to a monetary fine or penalty for a violation of the above provisions with respect to an applicant who has applied for unemployment benefits and has previously acted as an independent contractor during the past 5 years. The bill would repeal this provision on January 1, 2026. (2) The Labor Code Private Attorneys General Act of 2004 authorizes an aggrieved employee on behalf of the employee and other current or former employees to bring a civil action to recover specified civil penalties that would otherwise be assessed and collected by the Labor and Workforce Development Agency for the violation of certain provisions affecting employees. The act requires compliance with specified filing requirements by the aggrieved employee in order to bring the action, including providing notice to the agency and the employer with the specific provisions of the Labor Code alleged to have been violated, and the facts and theories that support the alleged violations. This bill would provide that the above act does not apply to an employee with respect to worker classification pursuant to a wage order if the employee has filed for unemployment insurance benefits and the employee's previous employer hired the employee as an independent contractor before January 1, 2020. The bill would repeal this provision on January 1, 2026. (3) Existing law authorizes the Employment Development Department to administer the federal-state unemployment insurance program and provides for the payment of unemployment compensation benefits to eligible individuals who are unemployed through no fault of their own. Existing law establishes procedures for the filing, determination, and payment of benefit claims, and those benefits are payable from the Unemployment Fund. Existing law requires the department to promptly pay benefits if it finds the claimant is eligible and to promptly deny benefits if it finds the claimant is ineligible for benefits. Existing law requires the department to consider facts submitted by an employer in making this determination and also provides for the department to audit claims, as specified. This bill would provide that an audit triggered pursuant to the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act) does not authorize the department or the Labor Commissioner, with respect to a claim for unemployment compensation benefits, to audit a previous determination of worker classification regarding an applicant's work for previous employers if the applicant has designated themselves as self-employed or as an independent contractor during the past 5 years. The bill would repeal this provision on January 1, 2026.