Vince B. EDD Audit Case Study
We are grateful to our client, Vince B., for sharing his story of how we were able to help him weather an EDD audit. This audit could have closed his business and had far-reaching repercussions for his personal finances as well as business finances.
In 2020, Vince was hit with an EDD audit that threatened to not only shut down his business but impact his personal finances as well. Hear his story of how our expert team navigated his misclassification audit and brought down hundreds of thousands in fees down to about $6,000. His misclassification audit closed in 2021.
Meet Vince in his testimonial below.
“My name is Vince Bindy and I’m a co-founder, co-owner of a behavioral health mental health facility in Orange County, California, and we’ve been operating efficiently for some years. And then we got hit with an EDD audit and to make a long story short, the EDD was trying to claim that all our therapists were actually employees.
At the time it was quite shocking and we contacted some various attorneys and one attorney really just terrified myself and my business partner, Nick.
We came up with potential damages of theoretically several hundred thousand dollars. What could have been $300,000, $250,000, $400,000. We really didn’t know. And also, what we found out, much to our chagrin, is I guess a couple or three years ago, I don’t know for sure.
The State of California passed a new law where if the corporation, for some reason, couldn’t pay all the back fees and penalties due to the EDD from an audit like this, they could come after us personally.
We called around, called around, interviewed three or four different attorneys. John Milikowsky’s law firm was one of the attorneys we interviewed.
Fortunately, we picked John.
All the attorneys sound good on the phone, right? When we first interviewed him, something about John felt right. He came across as very soothing and calm because we talked with a couple of other attorneys. And like I said, that one attorney really put the fear of God in us, times three. I mean, laying out all these potential scenarios. I guess that’s sometimes a sales technique to terrify somebody when you’re an attorney or other professions, and then getting them to sign up with you.
John didn’t use that approach, more of a straightforward one.
We told him what this other attorney said. And he said, “Yeah, that could happen. But it’s very rare. I’ve never had that happen to me. It’s very remote.” So, I liked that soothing approach. He’s very experienced. He laid out all the cases he worked with in the past and dealt with firms similar to us in the medical field about our size.
The third thing was just the way he was going to lay out the process. He just laid out the process. Here’s what we’re going to do first. Here’s what we’re going to do next. You’ll pay them a certain amount of money at this point and then kinda lay it out when the money will be due and kinda mapped out.
A lot of the times you ask an attorney, roughly get me in the ballpark, what it’s going to cost and you never get an answer.
And John had no guarantees. You can never get a guarantee from an attorney obviously, but kinda he laid out a min-max of what it might cost, his legal fees. And I appreciated that as well.
To make a long story short, that potential fear of having a debt of two, three, $400,000 got whittled down, negotiated by John’s legal firm down to, I believe, $6,000 in change. I could be off by a thousand bucks. It could have been five, could have been seven, I don’t remember. But when that happened, we were jumping for joy to tell you the truth. And so that’s why I’m doing this video. I’m extremely happy with the services.
And at the end of the day, results are all that matters in the way I view things and old John’s a great guy, but more importantly, he produced the results. And I got to tell you, that wasn’t even a goal. My goal with my partner, Nick, I said, “Nick, if John could get it below a hundred thousand dollars, I’d be happy at this point in time.”
He got it down to 6,000 and change. So what more can I say?”
Vince’s audit was an EDD worker reclassification audit, something we are seeing more and more of in our practice in 2021. EDD is actively seeking 1099 contractor misclassification cases since the passage of AB-5 the Gig work bill in January 2020.
The new ABCs of worker classification set stricter criteria for workers to be classified as contractors vs wage-earning W-2 employees. In the case of this client, there was one worker who was misclassified and EDD sought to compel the company to reclassify ALL of their 1099s as W-2s.
In cases like this, the advocacy of an experienced audit attorney can make the difference between a financially damaging penalty and a manageable penalty amount due. While no one case can determine the outcome of any other, we do know that EDD’s audits are swift, decisive, and aggressive.
Not sure what an EDD Benefit Audit is? Find out here.