The EDD has begun auditing employers with regard to the new CA Assembly Bill (AB) 5 that became effective January 1, 2020. This bill details the requirements that must be met in order to classify persons working for your business as independent contractors. Due to the high unemployment rate in 2020 and independent contractors filing for unemployment, the EDD will be analyzing the work performed by these independent contractors to determine if they should have been classified as employees. If it is determined that the independent contractor qualifies as an employee, notices will be sent to the employer requesting that payroll tax returns be filed. Failure to comply can result in substantial penalties and fines.