So, several employees of Heritage Residential Care, Inc. "lacked social security numbers." Naturally, the employer immediately fired them.
No, silly, the employer re-classified them as independent contractors! Because, after all, without social security numbers, the employer could not withhold taxes. And you have to withhold an employee's taxes. But you don't have to withhold an independent contractors! Brilliant!
As you can imagine, since this has come to my attention over here, the employer's deft maneuver did not end well. Employees sued for penalties, among other things, because the employer did not provide adequate "wage statements" per Labor Code section 226.
After losing before the Labor Commissioner, they sought review on whether the failure to issue compliant wage statements was "inadvertent." If so, Section 226.3 permits the Labor Commissioner to take that into consideration in deciding whether to assess the penalties.
No sale. After a painstakingly thorough analysis of the meaning of "inadvertence," the court of appeal decided it simply means that it was unintentional. Here, the employer intentionally chose to issue 1099 forms to these employees, because they lacked social security numbers.
Therefore, employers who intentionally issue defective wage statements, or who skip issuing them on purpose, will not qualify for the statutory leniency built into Labor Code section 226.3.
The case is Heritage Residential Care, Inc. v. DLSE and the opinion is here.