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Mainstay Business Solutions, an employee-leasing company announced it will shut down after a dispute with the California Employment Development Department.
According to the Sacramento Business Journal, the EDD has placed a levy on Mainstay in an attempt to collect about $16.5 million in unemployment taxes and penalties it contends Mainstay owes.
Loree Levy, spokeswoman for the EDD, said in a statement late Wednesday afternoon that the agency has been negotiating with Mainstay in good faith for two years, and that they had reached an impasse.
"The EDD took involuntary collection action permitted under the Unemployment Insurance Code in order to protect the department and the integrity of the Unemployment Insurance Trust Fund," a statement from Levy told the Business Journal.
Several years ago, Mainstay had battled the state Department of Insurance and the state Department of Industrial Relations, claiming that it had sovereign immunity from having to buy workers’ comp coverage for employees of its professional employer organization arm of the business. It instead sold an alternative workers’ comp product.
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