The Employment Development Department (EDD) is responsible for maintaining employment records, collecting payroll taxes, and auditing businesses to ensure that they are properly following employment guidelines. 

An audit occurs when EDD launches an investigation into a business’s payroll records to determine whether they have correctly classified their employees. What many don’t know is that EDD audits involve more than passive risk factors like classification. 

Construction Site Sweeps

The Contractors’ State License Board (CSLB) is responsible for licensing and regulating the California construction industry. Not only are they responsible for issuing licenses given proper approval, but they also investigate complaints, suspending or revoking licenses, issuing citations, and seeking sanctions against those who violate their requirements. 

CSLB conducts construction site sweeps both independently and in partnership with EDD. Their goal in conducting these sweeps is to combat any underground activity and ensure that businesses are properly following employment guidelines. 

A construction site sweep may involve an EDD representative visiting various construction sites to obtain immediate proof of employment and clarifying proper classification on the spot. 

Contractor Licenses

EDD may find your business responsible for improperly obeying employment guidelines in the verification of your contractors’ licenses. 

When you hire an independent contractor, it’s imperative that you verify their licenses to ensure that they are properly documented and licensed workers. While many business owners think it only important to check that contractors are licensed, it should be noted that they should also be verifying the expiration dates of said licenses. 

While a worker may have initially been correctly classified as a contractor, if a contractor’s license expires while working for your business, you must convert them to a W-2. 

If you fail to do so, EDD can hold you liable for various taxes and penalties on top of requiring them to be converted to a W-2 immediately. 

Our team at got1099 provides quarterly reports for your business to ensure that errors do not go unnoticed. We can support your business by helping identify which of your workers are eligible to be classified as independent contractors and correcting those that are not. Additionally, our recurring reporting is critical in ensuring that you’re made aware of any upcoming license expirations of your workers. 

Let us help you catch your mistakes before EDD does. Call or contact us today to get started.