California’s new labor law may have dire implications for insurance agents in the state. The law was enacted late last year and is designed to punish employers that misclassify workers in an attempt to receive discounts on their insurance coverage. The law itself does not make specific mention to insurance agents, but the language in which the law is written is very vague. Agents could easily fall victim to the law simply by providing employers with advice regarding employee classifications.
The law allows the California Labor and Workforce Development Agency to impose steep fines on companies that misrepresent their employees for monetary gain. The law’s language can easily be interpreted as applying to anyone that provides paid advice on the classification of employees if the companies receiving the advice are infringing upon the law. It is not uncommon for insurance agents to advise companies on classifying employees and how such classifications can affect their insurance rates.
Opponents of the law claim that California insurance agents should not have to be on edge simply for giving advice to clients. The law may encourage agents to stop providing advice to clients for fear of facing significant financial penalties. As such, agents would not be able to serve their clientele as adequately as they are meant to and could end up losing business. If the law cannot be more clear in who will be held accountable for labor crimes, this may soon be the reality for many insurance agents in the state.