Employment Law Compliance Audit

CRITICAL RISK — California Contractor Misclassification (Priority 1): CA uses the ABC test — a contractor must: A) be free from company control, B) perform work outside the company's core business, C) have an independent established business. Your 4 contractors working 30-40 hrs/week for 18 months almost certainly fail all three prongs. Exposure: back taxes, penalties, benefits owed, PAGA claims — potential $1,000-$10,000 per violation per contractor. Immediate action: consult CA employment attorney before next contractor payment. WAGE AND HOUR — Multi-State Complexity: CA: overtime after 8 hours/day (not just 40/week) — verify all CA workers tracked daily. Meal breaks required at 5 hours (CA); failure = 1 hour premium pay per missed break. NY: minimum wage varies by location ($16/hr NYC 2024). TX: follows federal FLSA minimums — lower risk. HARASSMENT POLICY (HIGH RISK — no policy in place): CA requires sexual harassment prevention training for ALL employees (2hrs for supervisors, 1hr for non-supervisors) within 6 months of hire. Written policy required. Create immediately. Employee Handbook: Required policies missing — at-will statement, harassment policy, PTO policy, expense reimbursement (CA REQUIRED), remote work policy. Remediation Priority: 1) CA contractor classification review. 2) Harassment policy + training. 3) Written offer letters. 4) Employee handbook. 5) Multi-state wage compliance audit.