CAN AN INDEPENDENT CONTRACTOR WORK FULL TIME HOURS FOR BELOW MINIMUM WAGE?

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Independent contractors are not entitled to minimum wage under California law and the federal Fair Labor Standards Act. They can work full time hours for below minimum wage.

CURRENT MINIMUM WAGE

Federal and state laws set minimum wage. Minimum wage is the minimum amount employers must pay employees for each hour worked. The purpose of minimum wage is to keep employers from paying unbearably low wages and provide employees with sufficient compensation so that they can meet their basic needs, such as food, clothing, and shelter.

      • California: California’s minimum wage is $9.00 an hour, and on January 1, 2016, it will increase to $10.00 an hour.
      • San Francisco: People who live and work in San Francisco are entitled to a higher minimum wage of $10.24 an hour.
      • Federal: Minimum wage under federal law is just $7.25 per hour. Because California’s minimum wage is higher, California employers must comply with it.

SOME DIFFERENCES BETWEEN INDEPENDENT CONTRACTORS AND EMPLOYEES

Unlike employees who may be tied to job obligations for one company, independent contractors may work for multiple companies over a span of time. They may be hired for specialized work, work that is not normally performed by the employer, or work that isn’t classified as long term. Independent contractors are sometimes thought of as freelancers or consultants.

Contrary to employees, independent contractors are paid as if they are operating their own business. Independent contractors are responsible for paying both the employer and employee’s share of taxes. They are often not provided with employer benefits. They are not guaranteed minimum wages or overtime wages, or protected by workers’ compensation. Further, independent contractors are not afforded the numerous other protections provided to employees under California law, such as meal breaks and rest breaks.

ADVANTAGES AND DISAVANTAGES WHEN WORKING AS AN INDEPENDENT CONTRACTOR

Being an independent contractor has several advantages, including:

      • You call the shots.
      • You can control the amount you’re paid in most situations.
      • No federal or state tax is withheld from your pay.
      • You can take increased business deductions.

But there is a fair share of disadvantages as well:

      • You must pay self-employment taxes.
      • You may be personally liable for business debts.
      • You have no employer-provided benefits.
      • You have no employer-provided workers’ compensation.
      • You have few labor law protections.

HOW DO OTHER JOBS STACK UP?

Independent contractors are not the only job positions that do not have to be paid at least minimum wage. Other positions include:

White-collar workers: Executive, administrative, and professional employees (including teachers and academic administrative personnel in elementary and secondary schools), outside sales employees, and certain skilled computer professional employees are exempt from minimum wage.

Farm workers: If you are related to the farm owner, work on a small farm based on total acreage, paid piece rate, or work with livestock, you may not qualify for minimum wage. Be sure to consult with a wage attorney if you have questions or concerns.

Seasonal amusement park and recreational workers: If you work for an employer or a place that operates seasonally, like a water park or a summer camp, you may be exempt from minimum wage.

Casual babysitters: People who do not babysit for an agreed-upon and documented set of hours during designated time period are not entitled to minimum wage.

Workers who receive tips: Although the Fair Labor Standards Act let employers pay tipped employees a lower minimum wage, California law does not. In California, tipped employees are entitled to the full wage for all hours worked.

Student workers: Full-time students who work in retail, agriculture, or colleges might not be entitled to the minimum wage if their employer has a special certificate from the federal Department of Labor.

STAY INFORMED

Although there are many laws in place to protect both wage earners and career employees alike, it never hurts to be informed. This is only a brief discussion on independent contractors and minimum wage laws and issues. Should you have questions, please don’t hesitate to contact me.