Heritage Residential Care, Inc. v. Division of Labor Standards Enforcement, 192 Cal. App. 4th 75 (2011)

Heritage Residential, a company that operates seven residential care facilities, employed 24 workers, 16 of whom lacked social security numbers. Heritage treated the 16 employees who did not have social security numbers as independent contractors and issued them 1099 statements rather than itemized wage statements. Following a workplace inspection of Heritage’s premises, the DLSE issued a citation for a $72,000 civil penalty for violation of Labor Code § 226, which requires an employer to issue itemized wage statements. During a subsequent administrative hearing, Heritage argued that it had treated those employees without social security numbers as independent contractors, and, therefore, its noncompliance with the statute had been “inadvertent.” The DLSE affirmed the citation and rejected Heritage’s defense of “inadvertence” – as did the trial court where Heritage filed a petition for writ of administrative mandamus. The Court of Appeal affirmed the denial of the petition, holding that “inadvertent” as used in the statute means “unintentional, accidental or not deliberate,” and Heritage’s failure to provide itemized wage statements was an intentional act on its part. See also Arzate v. Bridge Terminal Transp., 192 Cal. App. 4th 419 (2011) (owner/operators of transport cargo trucks may have been employees and not independent contractors of company that is in the business of arranging for the transportation of its customers’ cargo between ports or terminals and the customers’ facilities); Kullar v. Foot Locker Retail, Inc., 191 Cal. App. 4th 1201 (2011) (motion to disqualify employees’ counsel who filed a second wage-and-hour class action against employer after objecting to a proposed settlement of another class action was properly denied); Mayo Found. v. United States, 562 U.S. ___, 131 S. Ct. 704 (2011) (doctors who serve as medical residents are not students exempt from FICA taxes).