Major California Employer Lays Off 2,000 and Offers Contract Positions

According to a recent news article in the Los Angeles Business Journal, Health Net, Inc. has announced it will by laying off more than 2000 of its employees and offering them jobs as contractors to the company.

advertisementIn total, around 1200 employees in Woodland Hills and approximately 900 employees in Rancho Cordova will be without permanent positions, according to the major insurance company. The contract positions will be offered through a third-party consulting firm.

Health Net made this announcement in a “Workers Adjustment and Retraining Notice” they filed with the California Employment Development Department. Filing such a notice is required pursuant to California labor law, as our Orange County employment attorneys can explain in more detail. These 2,000-plus layoffs will become effective late next month.

While Health Net maintains that none of their current workforce will be left without a job, the consulting firm has not been willing to confirm they will hire all workers currently employed by the large insurance company.

According to the report Health Net filed with the state agency, the company had entered into a multi-year deal with the consulting firm in efforts to reduce administrative costs while being able to handle more health insurance plans.

One of the reasons companies favor hiring contractors over employees is because it means they are not responsible for handling administrative tasks like payroll and human resources. It also means they do not have to provide benefits to their workforce and can essentially terminate people at-will by asking the contractor to replace them. This is done when profits are more important than having well-trained employees who are happy with their jobs.

While this situation is not ideal for anyone who likes more stability in his or her employment, it is favorable to being unemployed, so many will likely take the offer if it is actually made. However, one of the problems that may arise in situations similar to this is that the workers may really be employees of an independent contractor and not contractors themselves, yet the agency attempts to treat them as independent contractors.

If a person works for a company, and only that company, and is completely supervised in every aspect of performance, he or she is most likely an employee. However, companies will still try to treat them as independent contractors to avoid liability, not have to carry workers’ compensation insurance, and not have to provide benefits in some cases.

This is known as employment misclassification and is not allowed under California labor law. If you are being told you are an independent contractor but are being treated like an employee in every way except being denied overtime pay and benefits, you should seek a consultation with an experienced employment attorney.

This is actually a very common situation faced by millions of workers, but courts have been more willing to decide in favor of workers’ rights than they have in the past. One industry in particular where we have a seen much change is the private package handling business.

Contact the employment attorneys at Nassiri Law Group, practicing in Orange County, Riverside and Los Angeles. Call 714-937-2020.

Additional Resources:

Health Net Shifts 2,000 Employees to Contractor, May 13, 2015, Los Angeles Business Journal

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Walz v. Ameriprise Fin. Inc. – Mental Illness Discrimination Allegation, March 21, 2015, Orange County Disability Discrimination Lawyer Blog