California Workers Compensation Firm Decides Independent Reps Are Employees After All Hot

If the ruling stands, independent advisory networks that operate in the state will have to pay into insurance funds to protect their "employees" from accidents on the job.

Ominously, the auditors here are assigning substantial fines -- $20,000 for firms with 30 reps -- for retroactive non-compliance, so even local companies that thought they were staffed with independent contractors may be liable.

This is a lot bigger than deciding how independent advisory networks account for their California affiliates.

Should workmans comp become an issue for contractors, there doesn't seem to be anything preventing California's unemployment program from coming after these firms looking for added taxes.

(On the other hand, this would help the occasional laid-off broker file for unemployment benefits.)

And should it become a precedent for auditors in other states, the traditionally lean costs and high payouts of the independent channel could be under challenge.

The Financial Services Institute has lobbied long and hard against California's efforts to increase the amount of paperwork it takes to maintain independent contractors in the state. Let's see what happens here.

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