Serious question, did anyone else get wrecked by the new AB 5 rules on their 1099 folks this year?
I run a small hauling biz out of Fresno and last Tuesday I got a letter from the EDD saying I owe $11,400 in back payroll taxes for two guys I've been paying as independent contractors since 2021. Both of them own their own trucks, set their own loads, and one even has his own LLC, so I figured I was fine. Turns out under the ABC test, if they can't work for anyone else while they're on my route, the state says they're employees, period. I spent three days digging through the AB 5 exemptions list and I still can't tell if trucking counts or not. My CPA told me to just pay it and switch them to W-2 before the audit gets worse, which feels insane for two dudes who show up in their own rigs. Has anyone actually beaten one of these EDD reclassification letters, or did you all just fold and eat the cost?