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In California, workers who are legally classified as independent contractors often have the freedom to work for themselves and according to their own schedules. While there are benefits to this type of arrangement, misclassification is a serious problem for independent contractors.

Misclassification typically occurs when a company places a 1099 independent contractor status to a worker when the worker should really be classified as a W2 employee. Companies often do this because independent contractors are not subject to the same wage and hour laws and other employment laws that protect full-fledged employees in California.

The independent contractor misclassification attorneys at Shegerian & Associates fight for workers in California who were deprived of certain rights and wages because of status misclassification. While most cases can be settled with negotiations, we are prepared to protect your rights to maximum compensation in and out of court.

The Legal Difference Between Employees and Independent Contractors

According to California Labor Code 3353, an “independent contractor” in California means any person who renders service for a specified recompense for a specified result, under the control of his principal as to the result of his work only and not as to the means by which such result is accomplished.

In order for someone to meet the definition of an independent contractor, California labor code states that a worker must be performing a service for another person or party, and both of the following statements must be true:

  1. The person performing the service is promised a specific payment for a result of their work.
  2. The person performing the service dictates how/when the service is performed.

Whether a worker is an “employee” or an “independent contractor” will guide the type of protections that an employee has and the responsibility of their employer. Independent contractors are not entitled to many benefits that must be offered to employees, such as:

  • Minimum wage laws
  • Overtime pay
  • Meal and rest breaks
  • Health and pension benefits
  • Social security credits
  • Protection against discrimination
  • Employment insurance

Unfortunately, some employers will intentionally wrongly classify their workers as “independent contractors” to avoid providing those benefits and protect their bottom lines. Thus, it is in your best interest to know whether you should be properly classified as an employee or independent contractor. This would also be beneficial for you to know when to seek the legal advice of an employee misclassification lawyer.

Courts use different tests for workers for deciding different issues, but there are some common principles. In wage and hour cases, they focus on the following factors:

  • The degree of control the employer exercises over the day-to-day work performed
  • The amount of the worker’s investment in facilities and work equipment
  • The worker’s opportunities for profit and loss
  • The degree to which the worker’s independent initiative, judgment and planning is necessary for the success of the worker’s operation
  • The permanency of the relationship between the employer and the worker
  • The extent to which the services are a part of the employer’s business
  • How dependent the worker is on the employer for continued work

The Limitations of a Signed Agreement to Work as an Independent Contractor

It is important to understand that, unless a person hired meets the legal definition of an independent contractor, they are considered an employee under California law and are thus entitled to all the protections that California employment law provides. In other words, all workers who do not meet the definition of an independent contractor are presumed employees.

It is common for hiring arrangements to involve some type of signed agreement. However, even if you signed an agreement agreeing to work as an independent contractor and not as a W2 employee, California courts will not assume you are an independent contractor. These types of agreements do not define the nature of the working relationship.

As of 2019, California will now use the “ABC test” in order to determine whether or not an employee can be classified as an independent contractor. This test assumes that all workers are employees unless the employee can prove the following:

  1. The worker is free from the control and direction of the employer’s business in connection to the work being performed under contract.
  2. The worker is performing work outside of the employer’s usual course of business.
  3. The worker is customarily engaged in an independently established trade, occupation, or business that is the same nature of the work being performed.

Potential Damages in Misclassification Lawsuit

The California misclassification penalties are oftentimes substantial. Recently, there have been some noteworthy cases where employers mistakenly classified employees as independent contractors.

The Allstate Insurance Company announced that it agreed to pay $19.5 million to 292 agents who claimed the company wrongly changed their status from “employees” to “independent contractors”. In another case, Microsoft agreed to pay $96.9 million to employees who contended that they were not temporary, independent contractors but really permanent employees of Microsoft.

The specific damages that may be available in a successful independent contractor misclassification lawsuit will vary depending on the case’s unique circumstances. However, the types of damages generally available include:

  • Liquidated damages, which is double the amount of any unpaid wages and overtime plus interest
  • Unpaid meal and rest breaks plus interest
  • Other benefits given to W2 employees, such as health insurance
  • Attorney fees and legal costs
  • Civil penalties, if your employer intentionally misclassified you

  • Unfortunately, employee misclassification is a common occurrence in the workplace. As a result of misclassification many employees are entitled to missing wages and benefits. If you believe that you have been deprived of wages and benefits due to a misclassification, California law provides you with the right to take legal action against your employer. With the help of an employee misclassification attorney, you may be able to:

    • File a “wage claim” with the state labor Commissioner or the U.S. Department of Labor’s wage and hour division
    • File an independent contractor misclassification lawsuit

    It is best that you consult with an independent contractor misclassification lawyer in order to determine how to best proceed. Some workers prefer to file a wage claim with the state because it is a quicker process and the labor commissioner offers mediation services to settle disputes without a hearing.

    However, there are times when bringing an independent contractor misclassification lawsuit may be the best way forward, especially if your employer refuses to settle or if there have been several of your co-workers misclassified. In this case, your lawyer may discuss the option to band together and file a class action lawsuit against your employer.

  • When you have been misclassified as an employee, you are entitled to the following damages:

    • Unpaid wages and overtime
    • Employment benefits
    • Compensation for minimum wage violations
    • Compensation for missed rest and meal breaks

    To know more about other remedies that you are entitled to from being misclassified, consult a lawyer.

  • It is important to differentiate an employee from a contractor because different laws apply to each. As such, different benefits and remedies apply. To prove that you are an employee, take note of the “ABC” test as mentioned above. Full time employees are entitled to benefits and overtime pay, so misclassification puts you at risk of not receiving these.

  • To prove that your employment has been misclassified, you may prepare and do the following:

    • Gather evidence pertaining to your proper classification as an employee
    • Contact an attorney as soon as possible

    Ensuring that you provide the proper documentation is vital to prove misclassification and an employment attorney will be able to help.

  • You may file a suit for employment misclassification by providing that such misclassification exists and gather enough evidence to prove the same. To move forward, seek the guidance of an employee misclassification attorney.

Contact an Employee Misclassification Attorney Today

If you need professional help for your legal disputes on your employment status, contact an employee misclassification lawyer at Shegerian & Associates today for free consultation. We’re here to help and would love to hear your story and let you know what legal remedies are available. And as always, there are no charges unless we win your case.

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