Assembly Bill 5, which required companies to reclassify most independent contractors as employees, is hurting employees.
An EDD audit is common if the EDD is concerned that your business has not correctly paid employment-related taxes or has mislabeled employees as independent contractors. An independent contractor who files for unemployment or disability benefits will raise suspicion with the EDD because contractors are not eligible for these programs.
Businesses with multiple 1099s may have inadvertently opened themselves up to EDD audit or investigation.