MAPC Lawyers Publish “$72,000 in Penalties Upheld Against Residential Nursing Home for Improperly Classifying Undocumented Workers as Independent Contractors”

By Joshua R. Dale

The Sixth District Court of Appeal (San Jose) upheld the imposition of civil penalties of $72,000 against an residential nursing home company that characterized 16 undocumented workers as independent contractors.  In so doing, the nursing home company failed to provide necessary itemized wage statements for each of the employees for each pay period.  As a result, a Department of Labor Standards Enforcement investigation found 504 separate violations of the requirement to provide accurate wage statements each pay period.

The residential nursing home argued both at the administrative hearing and trial court levels that its failure to provide wage statements was inadvertent, a contention which the appellate court rejected.  The appellate court found that the justification provided by the residential nursing, – that it could not withhold federal taxes as part of a wage statement because without a social security number it had no way to remit the withholdings – did not meet the definition of inadvertent, because it showed that the residential nursing home did intentionally not issue wage statements, but did so based on a faulty premise.  Inadvertence that would excuse the imposition of civil penalties in the context of the Labor Code means something along the lines of clerical error, not a misunderstanding of the law regarding when to issue a wage statement.

Heritage Residential Care, Inc. v. Division of Labor Standards Enforcement (6th Dist., Jan. 26, 2011) Case No. H034994