(EDD) Employment Development Department

[BUDMAN]

Anyone on here have experience dealing with them or know of anyone. I had a contract worker claim unemployment on me and now they are wanting to fuck me good and hard!!! Normally I don't complain openly about California's Government, but lets put the small business owner who employs 7-10 guys all year out of business over 1 drugged up piece of shit.

Short story, I had a couple of guys working for me as 1099 employees for the first 13 years in business, just a small mom & pop shop that paid the bills and had a little extra left over to have some weekend fun. Hired this contractor against my better judgment, but we needed the extra hands due to one of our currant customers expanding. About a month later I told the contractor that his services was no longer needed. I guess he couldn't find work and decided to file unemployment against me. Fast forward the EDD contacts me asking questions and I told them he was a 1099 contract worker, but they still wanted me to come down for an audit for three days. I simply told the lady it was not doable. She asked why? My replay was I can't afford to take 3 days off of work, that who was going to pay me the $4,000. a day I'll be missing while they were worried about his $500. claim. Since this occurred we have incorporated and employ more employees. Woke up this morning to the Corporate Bank account being drained of all funds.

So now I'm needing help dealing with this shit. I'll be honest. I'm a dip shit when it comes to this type of stuff. You want your fleet serviced, I can tell you what you want to know, but this. Way out of my league
PM me if you know of anyone or deal with this yours self
Thanks in advance.

 

[RaceTec]

This stuff sucks! Get a lawyer on it now! Every single time I have had to deal with EDD it has not gone well even when I thought I had all of my ducks in a row. They always side with the employee even if the employee admits wrongdoing etc.

 

[Wizard29]

I think first you need to understand and test to see if the employee actually qualified as a 1099 employee. The main point in that is the control aspect. Did you set his working hours or control how his work was done? True independent contractors are generally free to perform their work however and whenever they want.

Another thing to consider is if the work being performed by the contractor is a usual part of the business's regular line of work. if so, the worker is generally considered an employee.

Even if you have a contractor agreement in place, if the worker is treated like an employee, the 1099 contract will be disregarded by the state.

Once you have a better understanding of where you stand on this, you'll be in a better position to figure out how to handle the EDD.

 

[monkeyswrench]

There are few times I will say this, lawyer up. They know the rules, we don't. Keep your mouth shut and let the guys schooled in it handle it.

 

[BUDMAN]

What type of lawyer is needed? I've google Labor Attorney's and all that pops up is for the employee who wants to sue the employer. (again I'm a dip shit)

 

[Activated]

What type of lawyer is needed? I've google Labor Attorney's and all that pops up is for the employee who wants to sue the employer. (again I'm a dip shit)

In my experience in California, you are fucked.

PM sent.

 

[Mandelon]

You got caught calling an employee a "contractor" is what has happened. The board may very well come and interview all your employees and you'll end up paying all the back taxes and overtime and unemployment and workers comp that you haven't been paying on the workers. You should play very nice with them right now and hope to nip this shit in the bud.

You could get slightly screwed, or royally screwed. Be careful buddy. This could go way south on you in a hurry. I had some guys who all wanted extra hours. I told em I couldn't afford overtime on these jobs because we didn't bid them that way. No one cared, they just wanted straight pay. So we had an agreement... til one guy quit, and went to the labor board. They came in and checked with everybody. Even with an agreement for straight time, the board made me pay back OT for all the hours. Cost me a few grand, and no one was able to get extra hours any more.

 

[RIVERDAZE]

I dont envy you but...
You may have to pay a little if they make you join but I would contact your local Chamber of Commerce and ask about them about employment lawyers.

 

[Magic Mike]

I had a guy working for me for 10 years, he would make up his own hours but always got the work done. He would not give me his social security number and refused the idea of any deductions. Kind of a weird guy, but a great worker and I needed the help bad.
Out of the blue, he doesn't show up one day and I hear he got another job at a big company.
I get paperwork from unemployment for him, I tell them he quit and has a new job at so and so, how can he collect unemployment? Also, he was an ind. contractor that came and went as he pleased and refused to give me his ss#.
After over 2 years of paperwork, phone calls and telling them the facts repeatedly, they were kind of threatening me a bit and demanding a decent amount of money. Finally get a call from a female supervisor, tell her the story and where he is employed. She says, you've been telling us this story for 2 years and we are still bothering you? Easy for me to see if he has been receiving payroll, if it checks out we will not bother you again...

Bureaucracy bullshit, red tape, give us money, facts don't mean much nobody wants to listen to common sense.
I got really lucky that a supervisor with old school common sense got my case after a couple years.

I really hope someone with some brains gets assigned your case and can see what actually happened...

 

[Ziggy]

I had a guy working for me for 10 years, he would make up his own hours but always got the work done.
Out of the blue, he doesn't show up one day and I hear he got another job at a big company.
I get paperwork from unemployment for him, I say he quit and has a new job at so and so, how can he collect unemployment? Also, he was an ind. contractor that came and went as he pleased.
After over 2 years of paperwork, phone calls and telling them the facts repeatedly, they were kind of threatening me a bit and demanding a decent amount of money. Finally get a call from a female supervisor, tell her the story and where he is employed. She says, you've been telling us this story for 2 years and we are still bothering you? Easy for me to see if he has been receiving payroll, if it checks out we will not bother you again...

Bureaucracy bullshit, red tape, give us money, facts don't mean much nobody wants to listen to common sense.
I got really lucky that a supervisor with old school common sense got my case after a couple years.

I really hope someone with some brains gets assigned your case and can see what actually happened...

These edd employees are working their own corp ladder and the best way to climb up is by producing revenue generating results....not closed out files.

 

[HALLETT BOY]

Do not deal with these people on your own , get your book keeper at the very least to deal with them , pay your book keeper extra money . Try to negotiate if possible .

 

[wet hull]

Our last workers comp audit I was told everyone not licensed by CSLB is a employee to them regardless of what I thought. Even hanyman at under $500 per job threshold as a sub. Luckily I didn't have any or I would have been hit with taxes, WC and liability backcharge. Have a feeling EDD looks at this the same way. Good luck and hope you come out standing.

 

[arch stanton]

A new court ruling called the Dynamax decision makes almost all 1099 contractors employees this happened a year ago and is retro active as I understand it if the person working on your behave has to be paid as an employee by somebody a one man show will have to have his own real. Business with insurance,license or incorporated
Big changes are coming pushed by unions
California law makers currently righting exemptions to the ruling

 

[Activated]

What arch said above...in addition to that, if you subcontract to someone who is in the same business as you, they are your employee.

https://www.hrdefenseblog.com/2018/...tractors-the-new-abc-test-of-employee-status/

 

[Riverbottom]

I did not read all the posts. After thirty years I am thankful I sold my business in Calif. last year. If you are not a member of the California Employers Association, look them up and join. I think it is around $ 1,500. This is what they do, and have a legal team just for these occasions. They helped me big time when I had a similar situation. Good luck being an employer anymore sucks.

 

[HALLETT BOY]

The EDD , environmental health dept , Workman’s comp , liability etc is why I finally shut my business down after 40 + years ...

 

[seanroberts]

Like everyone is saying. Get the attorney be ready to pay both the attorney him and the state. I had 2 1099 guys doing some work for me work was done bad by one so got another to do I. The 2nd one screwed up so I replaced him also.

I had 14 witnesses and the 2nd guy was collecting unemployment for a year we found out while he was doing the 1099 work for me. You’re screwed in CA they’re always going to give it to you even if you’re in the right.

 

[Carlson-jet]

Sorry to read the troubles Budman. Had you hired illegals the state wouldn't have batted an eye. I handed Cal back my Lic and split town 25 years ago because all of the bureaucracy that constantly were going after guys who were somewhat legit while turning a blind eye to those who used illegals as labor Thumbing their noses at the laws. I couldn't/wouldn't compete.
Good luck. Solid info has been posted imo. I'm kind of surprised you went that route. The IRS was cracking down on 1099 30 years ago which is why I got My Lic in the first place.

Good luck.

 

[Havasu blue label]

Does your 1099 guy work for other people did you pay him by the day or job

 

[H20 Toie]

Been thru this, a guy we hired for one day to help load a truck filed for unemployment since we had 1099 him they used that as an excuse to look at everyone we had hired the previous 3 years
we told him what time to start so he was an employee,
It's going to cost you a bunch so get an attorney

 

[Melloyellovector]

I went through it about 10 years ago now.
Actually got the notice to appear literally the day before.

Had to scramble cancel and reschedule jobs etc.
Showed up pisssed and ready to be screwed over. And my ex guy was in lobby, heeyyyyy what’s up Tim how are you. I’m like dude I’m not your friend, and if you ever see me outside I suggest you run!
EDD lady started out like a pit bull, saying she was contacting CSLB, IRS etc
I told her do what she wants I got nothing to hide, gave my side of story.
She straight flipped the script on worker. Cut his claim down to less then half. Had me write it to him, she had me add notes on payment to protect me, she made copies and put in file and said it’s closed. Then she told him if any of the other guys tried similar claim she would deny and or come after him personally and she’d make him pay, lmao
I paid, but could have been much worse. So EDD maybe I’m the only semi success ish story. Lol

 

[Universal Elements]

Been thru this, a guy we hired for one day to help load a truck filed for unemployment since we had 1099 him they used that as an excuse to look at everyone we had hired the previous 3 years
we told him what time to start so he was an employee,
It's going to cost you a bunch so get an attorney

This x 2

 

[Havasu blue label]

i stoped 1099 my help have them sign release of liability contract it covers there help and you don't give them any of your tools rent them to them it should be fine edd is tough at first but hold your ground and tell your sub you will report them to workmen comp it will get him thinking

 

[Waterjunky]

The rape clip from a bad movie is just starting and you are the cute girl.

Sorry but you are in real trouble. Get a lawyer ASAP! There are dozens of ways this is the cheapest solution, and very few that are long shots that the lawyer is not.

 

[C-2]

Whoa, pump the brakes trailer guy!

Some things to consider...

Think about it logically, first.

If they levied your bank account, then I would guess there's little you can do to contest their decision as it's already final; the time to oppose any decision has come and gone. They have you by the balls and they know it.

But, you should have a dollar amount to work with - the amount they are trying to collect.

Figure out how much they got on their levy. Was it enough to satisfy the liability?

If the remaining liability is only a few thousand more - then does it make sense to lawyer up? Or, just take the lawyer money and pay it towards the liability and be done with it?

Also, most levy's are subject to an exemption hearing, or you can file an opposition. Maybe a spouse can file a third-party claim to the levy, asserting a community property interest? That can buy you time to sort it out, or to come up with a game plan.

The fact a levy is in place does not mean it's proper, which is the reason why most levies can be opposed. Like most things legal, if you do not object to it, then it can become final. And again, does it make financial sense to lawyer up on the amount they collected? BTW, a levy is only valid on the day it is served, it's not ongoing like an attachment.

As with the FTB or IRS - if you are willing to enter a repayment plan, then they are always willing to work with you. It's when you ignore them that they go to levy. They also have voluntary garnishments if you are not disciplined enough to make monthly payments.

I know this too - tax agencies levy first and will record a tax lien next (if it hasn't been done already). If you can avoid that, then that's one less headache to worry about.

So maybe your solution is to contact them and work something out... Obviously, taking the "wait and see what happens" approach did not work and they already have the skinny on you (if they found and levied your account, so what is the downside?

 

[Havasu blue label]

Very true

 

[CoolCruzin]

I have my 1099 guy sign a real simple agreement.
Saying he is 1099 contract position and understands he dose not work my company as an employee.

 

[Wizard29]

I have my 1099 guy sign a real simple agreement.
Saying he is 1099 contract position and understands he dose not work my company as an employee.

Won't do any good if he meets any of the criteria for being an employee. The state will purposely disregard any agreements or contracts.

 

[C-2]

Private agreements do not take precedence over tax laws no matter how they are written, or what they say. Even mortgages play second fiddle to the tax man (property taxes). Similarly, an agreement cannot be enforced that prevents a person from exercising their due process rights. For example, you cannot enforce a "I agree not to file bankruptcy" clause in a contract.

 

[C-2]

Budman, if it's a liability on one employee, don't get get all freaked out. Pay it, lesson learned, move on.

If on the other hand, they nailed you with a bunch of different liabilities because you refused to cooperate, then simply Google search "EDD Levy" and you will find lotsa attorneys.

I bought a business 25-years ago and didn't know shiat about running it. One month I thought I could float some cash by not paying FUTA taxes. I figured I would pay them the following month, which turned into several months.

Then, one day an IRS revenue agent (badge and gun) showed up and said she was there to seize the business. But, I got my accountant on the phone, she saw I was a dumbass, and then I started about a 10-year repayment agreement. I quickly learned, do not F* around with "trust fund" taxes as doing so is quasi-criminal.

 

[Moneypit]

Not sure if it can be done legally, but you need to find out how he has filed his taxes in the past few years... Was he previously a 1099 contractor?? Or, has he failed to file at all?? Is part of this "settlement" to do with your "Unemployment Reserve Fund"? That is a reserve an employer has to have with EED in case an employee files a claim.. No claims, the fund remains stagnant, meaning you don't have to add to it...As mentioned a few times, (or 25), get a lawyer, don't wait, and certainly don't ignore it any longer...
Best of luck, you seem like a nice guy..(You can tell EDD I said that)...
Ray (I've been on both sides of this crap, lawyer up and kick their ass)..

 

[Angler]

If he works full time, he is your employee... Sucks for sure.

 

[arch stanton]

As I said before the Dynamax decision in retroactive at least 3 years back maybe more all the old way of hiring 1099 people is dead and gone

 

[DaveC]

Dude, don't mess with the EDD (or the Franchise Tax Board for that matter) They have a chip on their shoulder and love to play captain-save-a-hoe.

It costs you nothing to have a discussion with them. Maybe give them a call and find out what their problem is and get information on the levy. Don't offer any information just hear what they have to say. (give them the "I don't know whats going on", "first I heard of it" and "I have to look into it and get back to you" routine)

Once you find out what their damn problem is you can get some advice on how to fix it.

Since you didn't respond to them they just go ahead and assess penalties that may or not be due. They tend to do that if you ignore them.

I don't recommend ignoring them. Even if you can't the resolution you want to at least defend yourself and then you can negotiate and get a more favorable determination than if you ignored them.

EDD deals with both unemployment and also payroll taxes. So you may have one or more problems with them. Start with finding out what their damn problem is.

BTW don't ignore going to an audit with them. The FTB and IRS have the power to levy as you found out.

best wishes.

 

[Mandelon]

Any updates Paul? Curious how far they are going to go with it.

 

[DaveC]

Poor SOB.

If I had the choice of being this poor guy or Vic right now I think I would take Vic. Vic is in less trouble right now....

J/K. You are both screwed and I hate to kick a man while he is down.

 

[Mandelon]

He hasn't come back. I hope the handcuffs aren't too tight...