Independent Contractor Employee Misclassification

INDEPENDENT CONTRACTORS VS. EMPLOYEES

Many employers try to save money by misclassifying workers as “independent contractors” rather than “employees.” Their motivation for doing this is to avoid paying things such as: 1) workers compensation insurance, 2) payroll taxes, 3) minimum wage or overtime pay, 4) business expenses (such as mileage on a vehicle and specialized equipment,) and 5) benefits (such as health insurance and 401(k) contributions).

In contrast 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 and overtime wages or protected by workers compensation. And independent contractors are not afforded the numerous other protections provided to employees under California law, such as meal and rest breaks.

DETERMINATIVE FACTORS

Simply labeling a worker as an independent contractor does not make him or her one. Even if the worker signs a contract saying that he or she is an independent contractor, that doesn’t mean anything. To determine whether a worker is an independent contractor or an employee, California law requires the entire employment situation to be evaluated.

When evaluating the employment situation, several factors are considered, but no single factor is determinative:

⇒ Does the employer control the person’s work details, such as how, when, where, and where the work is performed? If yes, then this factor weighs in favor of the person being an employee

⇒ Does the person perform work in an occupation or business that is the same as the employer’s business? If yes, then this factor weighs in favor of the person being an employee

⇒ Does the person perform work that is part of the employer’s regular business? If yes, then this factor weighs in favor of the person being an employee

⇒ Does the employer provide the person with a work place, as well as the equipment, materials, instrumentalities and tools necessary to perform the work? If yes, then this factor weighs in favor of the person being an employee

⇒ Does the person only have minimal financial investments in equipment, materials, and tools required to perform the work? If yes, then this factor weighs in favor of the person being an employee

⇒ Does the work performed require a unique skill in a particular occupation? If no, then this factor weighs in favor of the person being an employee

⇒ Does the person require the employer’s supervision? If yes, then this factor weighs in favor of the person being an employee

⇒ Is the person’s opportunity for profit or loss depend on his or her own managerial skills? If no, then this factor weighs in favor of the person being an employee

⇒ Is the length of the working relationship limited to particular tasks the person was hired to perform? If no, then this factor weighs in favor of the person being an employee

⇒ Does the person get paid by hour as opposed to by the job? If yes, then this factor weighs in favor of the person being an employee

⇒ Do the parties believe they are creating an employer-independent contractor relationship? If no, then this factor weighs in favor of the person being an employee

EXAMPLES

⇒ A housekeeper who works in many different houses might be an independent contractor to each homeowner, but a housekeeper who only has one job, and works 3 or 4 days per week in one home would be considered an employee

⇒ A full-time limousine or van shuttle driver is generally an employee;

⇒ An outside salesperson who works full time for a company is an employee;

⇒ A worker that works full time for a single company in the company office is usually an employee

DAMAGES

If a worker is misclassified as an independent contractor, the worker may be entitled to recover the amount they should have been paid, the value of the benefits they should have been provided, along with other damages, penalties, and attorneys’ fees.

SEEK CONSULTATION

If you feel that you are misclassified as an independent contractor, contact us for a free consultation.