On Friday the California supreme Court ruled that a sub contractor can not be a sub if they are providing the same service as the hiring business and they are now considered your employee. Basically, if you’re a window cleaning company and you sub window cleaning out to another person, they are now you’re employee.
I haven’t subbed anything since we first opened but I know several individuals where this is there model. How would the government find out? I don’t know, but if you know California, they’re pretty ruthless when it comes to employee issues. My guess is if you sub out work, you probably want to make sure the person you’re subbing to is incorporated. I think that would be the only way you get around this. The ruling states anyone in the same line of business providing the same service, so I figure a corporation obviously can’t be someone’s employee which gets around this rule. But I’m not an attorney and this ruling just came out on Friday.
Here’s a link to an article about the ruling but there isn’t a lot of detailed information: