Case: the helper on a 1099
In one paragraph
Mateo Salcedo pays his helper $28 an hour on a 1099 for fourteen months, with a workers' compensation exemption on file at CSLB, because the helper 'wanted it that way' and the arithmetic looked better. Then the helper falls from a ladder on a Tuesday, the emergency room asks for the workers' compensation carrier, and every agency in this phase arrives in order: the Division of Labor Standards Enforcement with a stop order and a $1,500 penalty, the Uninsured Employers Fund paying the claim and coming back for the money, CSLB with a $10,000 minimum penalty and a suspension that dates back to the helper's first day, EDD with an audit of fourteen months of unreported wages, and the Labor Commissioner with the helper's own claim for overtime, sick leave, a late final check and a misclassification penalty. The case adds it up against what payroll would have cost, and finds the 1099 was the most expensive decision the company ever made. The names are invented; the statutes are quoted.
The rule
A helper doing electrical work for a C-10 is an employee under both the ABC test (Labor Code 2775(b)(1)) and the licensed-work presumption (2750.5), whatever the paperwork says. An employer who fails to insure faces a stop order and a penalty of $1,500 per employee or twice the unpaid premium (3722), a misdemeanor with a fine of at least $10,000 (3700.5(a)), and collection of the injured worker's award by the Uninsured Employers Fund (3717); a licensee who employs after filing an exemption owes a minimum $10,000 civil penalty and is suspended by operation of law from the day coverage was first required (B&P 7125.4, 7125.2); and the worker recovers overtime (510), sick leave (246), a waiting-time penalty (203) and a misclassification penalty of $5,000 to $15,000 (226.8), while EDD assesses the unpaid payroll taxes (UIC 1086; EDD rates).
Why it matters
Every number in this case was avoidable for roughly what the contractor would have paid a payroll service and a workers' compensation carrier over the same fourteen months. The case exists to make that comparison concrete, because the 1099 arrangement is never chosen after reading the statutes; it is chosen because it looks cheaper on the day of the hire, and this is what it looks like on the day of the fall.