What You Need to Know About Employee Misclassification
The primary reason wage and hour laws exist is to protect employees from wrongdoing by their employers. Unfortunately, employers sometimes intentionally or mistakenly violate the law. One such violation that has been the subject of news stories several times recently is misclassification of employees as independent contractors.
Why is the misclassification of workers such a serious issue? This is mainly because employers benefit financially from misclassifying workers, by enjoying lower labor costs and fewer state and federal taxes. Unfortunately, this benefit comes at the worker’s expense, as workers lose out on the right to overtime, unemployment insurance, disability coverage and social security payments. Additionally, workers must often pay higher taxes as independent contractors.
Employee vs Independent Contractor
The law regarding classification of employees is rather complex. However, there are several factors that are looked at to determine whether a worker is an employee or independent contractor.
The main question when it comes to classification is one of control. Specifically, does the worker or employer control how and when the work is done? Under California law, when determining whether a worker is properly classified, a court will consider several factors including:
- Does the worker need to provide his or her own tools, equipment or supplies to do the job?
- Is the work performed an integral part of the employer’s business?
- Is the worker paid by the job or by the time worked?
- Does the nature of the work require special skills in order to be done successfully?
- Is the worker’s employment temporary or permanent?
- How much control does the employer have over how and when the work is performed?
These are just some of the factors that are considered in determining whether a worker was misclassified. With some exceptions, the more control and discretion a worker has over how and when a job is performed, the more likely that he or she is an independent contractor. The same is generally true if the job is temporary in nature or if the worker is paid by the job or must provide his or her own tools and equipment.
Employers that misclassify their employees can face fines of up to $5,000-$15,000 per violation under California law. If there is evidence of a pattern of willful or intentional misclassification, the penalties can increase to $10,000 to $25,000 per violation. Additionally, misclassified workers can file a claim against their employers for back pay, overtime and other compensation that is due to them.
Speak with an Attorney
If you believe that you have been misclassified as an independent contractor, it is wise to speak with an attorney as soon as possible. The experienced employment law attorneys at Lawless, Lawless & McGrath can examine your personal circumstances and advise you further on the legal remedies available to you.