Effective January 1, 2012, California has a new law, Senate Bill 459 (SB 459), which significantly increases the penalties that can be assessed against employers who willfully misclassify as independent contractors individuals who should be treated as employees. If your business utilizes independent contractors, it is extremely important that you take the time now to understand the impact of this new law to your company and to take the necessary steps to ensure appropriate compliance with this law. The highlights of the law are summarized below for your reference, although they are not
meant to be all-inclusive.
SB 459 makes it unlawful for any person or employer to engage in “willful misclassification” of an individual as an independent contractor. The law also prohibits charging individuals who have been misclassified as independent contractors a fee or making deductions (e.g., for space rental, goods, equipment maintenance) from compensation if those acts would have violated the law had the individuals not been misclassified.
This new law comes on the tail of the IRS’s recent announcement regarding its new settlement initiative, the Voluntary Classification Settlement Program (VCSP), allowing employers to: 1) come forward if they are not under audit, 2) reclassify independent contractors as employees, and 3) pay a significantly reduced employment tax.
Who has authority to assess compliance and penalties?
SB 459 authorizes the Labor and Workforce Development Agency, specifically the Labor Commissioner or a court, to assess specified civil penalties on persons or employers violating the law. SB 459 also requires the agency to take other specified disciplinary actions against these individuals.
What happens if I am found to have violated the law?
The law requires employers who are found to have engaged in a misclassification “to display prominently” for one year on their websites a notice to employees and the general public announcing, among other things, that the employer “has committed a serious violation of law by engaging in willful misclassification of employees.” The notice must be signed by a corporate officer.
What are the fines and penalties?
Violation of the new statute carries exposure for a civil penalty of between $5,000 and $15,000 for each violation. If the employer is found to have engaged “in a pattern or practice of violations,” the civil penalty is increased to $10,000 and $25,000 per violation. The law does not define the term “pattern or practice.”
Where should I go for assistance and additional information if I have independent contractors?
We strongly encourage you to consult with legal counsel experienced in employment practice matters to review your independent contractor relationships, to determine the appropriateness of these classifications, and to assist you if re-classifications may be required to mitigate potential legal exposures to your business.
// ESSENTIAL TO MEDICARE COST REPORT FILING //
This is to provide you with important information regarding your Individual Authorized Access to the CMS Computer Services (IACS).
It is very important that you do not ignore or disregard any emails from Centers for Medicare Services (CMS). Please take the actions instructed in their emails and respond to them ASAP, if requested.
Pay close attention especially to emails regarding password renewals, annual certification and you need to update the information on your account if your agency had a change of address and/or phone number. Failure to do so could result in your accounts being deactivated which would require significant time to restore.
Also, CMS recently updated their system which disabled some IACS accounts. Please login to your IACS account ASAP to make sure that your account is still active. You will be unable to log in to your account if your account has been disabled. If this happens, please call IACS ASAP so they can assist you in reactivating your account. There are also cases where you can log in, but you do not have a role anymore (i.e. Security Official). If this happens, you will need to reapply for that role again.
Unlike before, your Medicare intermediary (i.e. National Government Services, CGS, Palmetto, etc) will no longer be able to email you your Provider Statistical and Reimbursement (PS&R) reports.
Although CMS would assist in these complications, it does not guarantee a timely resolution. Please try to avoid any complications that could delay the submission of your cost report by responding to the CMS emails and checking your accounts’ status promptly. 100% of your Medicare payments maybe suspended if the cost report is not filed in a timely manner.
If you need any assistance with the information above, please contact the IACS External User Services (EUS) Help desk at 866-484-8049; EUSSupport@cgi.com or you may contact Claire from our office at (909)305-0211; claire [at] ebmcpa.com.
Please be informed:
Palmetto and CGS have announced new mailing addresses effective November 30, 2011 and December 5, 2011 respectively.
NEW PALMETTO MAILING ADDRESSES (Effective November 30, 2011):
For Cost Reports and Supporting Information
U.S. Mail
Palmetto GBA
Attn: Cost Report Acceptance (AG-330)
P.O. Box 100144
Columbia, SC, 29202-3144
Courier Service
Palmetto GBA
Attn: Cost Report Acceptance (AG-330)
2300 Springdale Drive, Bldg. One
Camden, SC 29020
For Checks and Correspondence Relating to Amounts Due on Cost Reports
U.S. Mail
Medicare Finance (AG-260)
Palmetto GBA, LLC
P.O. Box 100277
Columbia, SC 29202-0277
Courier Service
Medicare Finance (AG-260)
Palmetto GBA, LLC
2300 Springdale Drive, Building One
Camden, SC 29020-1728
NEW CGS MAILING ADDRESSES (Use after December 5, 2011):
Cost Reports
J15 — HHH Audit & Reimbursement
CGS Administrators, LLC
PO Box 20015
Nashville, TN 37202
Home Health and Hospice Claims/Adjustments
J15 — Part B/HHH Claims
CGS Administrators, LLC
PO Box 20019
Nashville, TN 37202
Provider Enrollment Correspondence
J15 — HHH Provider Enrollment
CGS Administrators, LLC
PO Box 20016
Nashville, TN 37202
General Correspondence
Additional Development Request (ADR)
Appeals
Medical Review
Written Reopenings
Credit Balance Reporting (no checks)
Freedom of Information (FOIA)
J15 — HHH Correspondence
CGS Administrators, LLC
PO Box 20014
Nashville, TN 37202
