What Happens if I Receive an Inquiry of Record Notice?

One of the most common audit calls I receive is from businesses who get an inquiry of record notice, or a pre-audit questionnaire. The EDD is going to audit you for three years. What they want to do is they’re looking for the independent contractors that you have paid, and they are looking to reclassify them as employees. In the state of California, I always tell my clients, we assume all workers are employees. Start with the assumption that these are employees, unless we can prove otherwise. This is the best way to protect yourself going forward. When we’re in an EDD on it, we have the burden of proof. We must show the EDD why these individuals that we paid money are, in fact, independent contractors. There are many different thresholds that need to be met. But it’s important to understand that we have to provide that information to the EDD.