California Independent Contractor Misclassification Costs Amity In-Home Care $2.3M

Worker Misclassification Costs Amity $2.3M

On February 20, 2025, the California Labor Commissioner’s Office (“LCO”), a division of the Department of Industrial Relations (“DIR”), fined Amity In-Home Care Services, Inc. (“Amity”) over $2.3 million for misclassifying its workers as independent contractors.

Amity is a California-based home care agency that provides non-medical services such as personal hygiene, light housekeeping, companionship, and mobility assistance through its team of “skilled and dependable caregivers.”

In April 2023, the LCO received a tip from Bet Tzedek Legal Services regarding suspected misclassification of Amity caregivers.  In response, the LCO conducted an investigation and uncovered a number of serious wage and hour violations at Amity, including failure to properly pay overtime wages, failure to provide the required workers’ compensation insurance, and failure to issue proper wage statements.  The investigation resulted in an immediate Stop Order Penalty Assessment, a financial penalty imposed on employers that fail to provide workers’ compensation insurance.

In sum, the LCO found that Amity deliberately violated California labor laws and assessed the following fines:

• $422,033 in unpaid minimum wages;*
• $424,809 in unpaid overtime wages;*
• $165,162 in meal and rest period premiums;*
• $27,400 in wage statement penalties;
• $108,094 in waiting time penalties for delayed final wages;
• $550,000 in penalties for willful worker misclassification;
• $81,673 in penalties for not providing workers’ compensation insurance to misclassified employees;
• $422,033 in liquidated damages; and
• $18,950 for other civil penalties.

*These amounts include interest payable to the misclassified employees.

These penalties total to $2,327,257, and $2,203,384 of this amount was payable to the misclassified caregivers.

These citations are the LCO’s first actions under Assembly Bill 594, which expanded the scope of the LCO’s wage and hour enforcement powers under California Labor Code Section 181.  Unlike the Private Attorneys General Act (“PAGA”), which requires that 75% of recovered penalties go to the State, Assembly Bill 594 states that recovered funds must first be applied to payments due to aggrieved workers.

What is Wage Theft?

Wage theft occurs when employers neglect to pay their workers for all hours worked.  This includes overtime and breaks as mandated by California labor law.  According to the California Department of Industrial Relations, other examples of wage theft include being paid less than hourly minimum wage, not accruing or not being allowed to use paid sick leave, not receiving final wages in a timely manner, unauthorized deductions from paychecks, or failing to receive timely access to personnel files and payroll records, among other things.

Unfortunately, wage theft is a common problem. A 2019 Public Rights Project study found that 39% of those surveyed had experienced wage theft at least once in the past ten years.  The National Employment Law Project believes this number to be a conservative estimate.

What is Misclassification?

Misclassification is a common form of wage theft and fraud.  It occurs when workers are incorrectly treated as independent contractors instead of employees.  Misclassification strips workers of important protections such as workers’ compensation, unemployment benefits, and family leave.

According to California Labor Commissioner Lilia García-Bower, “Misclassifying workers is not a simple paperwork error,” but “a deliberate violation of the law that denies employees earned wages, protections, and benefits they are legally owed and entitled to. [The LCO] is committed to holding employers accountable and ensuring all workers, especially caregivers, receive the pay they deserve.”

In connection with this commitment, the LCO launched Reaching Every Californian, an interdisciplinary outreach campaign, in 2020.  Reaching Every Californian aims to amplify basic worker protections for the most vulnerable populations, where labor law violations occur more frequently.  The program provides resources to both workers and employers so they can identify and report labor law violations.

How to Report an Employer for Independent Contractor Misclassification

Wage theft often goes unreported because workers fear retaliation from their employers.  However, under California law, workers are protected from retaliation when reporting wage theft, including misclassification.  Workers in California who believe they have been misclassified can file a wage claim or submit a Report of Labor Law Violation with the LCO for matters affecting a group of employees.  These resources and more can be accessed through the California Labor & Workforce Development Agency.

Workers who have believe they have been misclassified can also contact an employment attorney and file a lawsuit in court. The legal team at Miller Shah LLP has extensive experience representing misclassification matters.  If you have any questions regarding this subject or this post, please fill out a form or call us toll-free at (866) 540-5505.