San Jose candidate admits employee classification error

Betty Q. Hixson

San Jose Councilmember Matt Mahan’s mayoral campaign is correcting the misclassifying of some of its employees, weeks after facing a complaint filed with the state labor commissioner.

The changes follow San José Spotlight’s reporting on how Mahan’s campaign listed at least 18 workers as consultants in campaign finance disclosure forms. More than half are high schoolers, in college or recent grads. None own campaign consultancies or firms.

“As soon as we learned that some of our workers may have been mislabeled on our forms 460s, we engaged legal counsel with expertise in the labor and employment field,” Matthew Quevedo, Mahan’s campaign manager, told San José Spotlight. “We have now corrected the instances of mislabeled workers on previous form 460s and we are filing taxes for those workers now being re-classified as employees.”

Quevedo added the campaign decided to make the changes “out of an abundance of caution.” He wouldn’t address the pending state complaint.

Mahan’s campaign now lists its payments to workers under “wages” or “stipend,” according to its latest campaign finance filing. The workers were previously listed as “consultants.” The campaign also started paying for liability insurance and payroll taxes, which it hadn’t in the past.

The campaign’s misclassification of the workers—ranging from volunteer coordinator to deputy field director to campaign manager—appears to violate Assembly Bill 5, a state law approved in 2019 that requires many companies to classify workers, including campaign staff, as employees instead of independent contractors. The law, initially targeting rideshare companies, attempted to crack down on employers misclassifying workers to skirt paying benefits, payroll taxes and higher wages.

As employees, workers would be entitled to benefits such as breaks, sick leave and overtime pay.

Two labor and employment attorneys who reviewed the situation previously told San José Spotlight they saw a case for misclassification.

Days after this news organization reported potential labor law violations, local prosecutor and San Jose resident Kevin Smith filed a complaint with the California Department of Labor, claiming Mahan’s campaign is violating AB 5 by treating workers as contractors instead of employees.

Civil penalties for misclassification range between $5,000 and $25,000, according to California law. The attorney general, district attorney or city attorney could also investigate misclassification claims and prosecute violators.

Mahan is facing Santa Clara County Supervisor Cindy Chavez for the San Jose mayor seat. The general election is Nov. 8.

San Jose mayoral candidate admits employee classification error

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