Thank you for the information:
Your Initial Post:I had an independent contractor from January of 2011 to December of 2011 I send him his 1099 in 2012, now 2013 he contacted me saying he is was not independent contractor for 2011, he wants to contact labor department to complain, does he has a case or could i go to jail for this, he maid $38000.
I maid mistake I did not know the laws for independent contractors, so it was my fault to hire him as contractor.
Response : Determining whether a worker is an employee or an Independent Contractor is fact specific. If the employer controls or dictates how the Independent Contractor works, the Independent Contractor is not an Independent Contractor and is actually an employee. If the Independent Contractor is an employee, the employer must comply with the labor laws by paying payroll taxes, unemployment insurance, worker's compensation, etc. So, if your former employee reports you to the ‘labor department,” you would be ordered to pay all taxes due for that employee. You are not going to go to jail because of this. It is a common mistake employers make by misclassifying their employees as Independent Contractors.
These are the Departments that you need to contact to make sure that you have complied with the labor laws:
(1) Department of the Employment Development Department (EDD). This Department handles employment-related taxes. On the web site, click under "Employers" on the right hand side for more information:
(2) Division of Labor Standards Enforcement (DLSE), handles wage, hour and workers' compensation insurance issues:
Discussion of Independent Contractor versus Employee: