From California Peculiarities Employment Law Blog —
Employers use independent contractors instead of employees for a variety of reasons and under a variety of circumstances. The decision to use independent contractors has never been without risk, including the risk of class action lawsuits. However, the stakes in California for misclassifying independent contractors were raised significantly when new Labor Code sections 226.8 and 2753 became effective on January 1, 2012. In addition to possibly having to pay the worker as an employee for past labor (including paying back employment taxes and maybe overtime wages), you now have to be concerned about the potential for additional civil penalties.
Read the full story at Employee or Independent Contractor? The Risks of Making A Wrong Decision Grow