Independent Contractor vs. Employee

Disputes sometimes arise regarding the “employment status” of workers. The hiring entity claims the worker is an independent contractor and not an employee. To determine if workers in California are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the Industrial Welfare Commission (IWC) wage orders, the law requires the application of the “ABC test.”  Employers and workers should consult an experienced employment law attorney to discuss if the "ABC test" applies to their circumstances. 

 

FAQ:

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Q:  Are there situations where the ABC test will not apply?

A:  Yes. Sometimes the Legislature or the Industrial Welfare Commission has defined the employment relationship in a specific way. In such cases, the ABC test will not otherwise apply to establish employee status or employer liability. Rather, the specific language contained in the IWC wage orders, the Labor Code, or Unemployment Insurance Code will remain in effect. Additionally, where a court determines the ABC test cannot apply for a reason other than an express exception, the "Borello test", described below, will apply. Employers and workers should consult an experienced employment law attorney to determine which test will apply to their circumstances.

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Q:  Are there penalties for misclassifying workers as independent contractors?

A:  Yes. In addition to penalties that may be assessed for wage violations associated with a worker being misclassified as an independent contractor, there are civil penalties for willful misclassification. Employers and workers should consult an experienced employment law attorney regarding the possible penalties for violating this law. 
 

Q:  What difference does it make if a worker is an employee rather than an independent contractor?

A:  California’s wage and hour laws (e.g., minimum wage, overtime, meal periods and rest breaks, etc.), workplace safety laws, and retaliation laws protect employees, but not independent contractors. Additionally, employees can go to state agencies such as the Labor Commissioner’s Office to seek enforcement of these laws, whereas independent contractors must resolve their disputes or enforce their rights under their contracts through other means.
 

Q:  What should workers do if their employer keeps them under independent contractor status when they think they should be considered an employee?

A:  A worker can file one or more of the following:

• A wage claim with the Labor Commissioner’s Office

• A report of Labor Law Violation with the Labor Commissioner’s Office for widespread violations affecting a group of workers

• A lawsuit in court

 

Q:  Are there protections if a worker is retaliated against because the worker complains about being misclassified and losing out on employee rights like being paid overtime?

A:  Yes. Workers who face discrimination or retaliation in any manner whatsoever should consult with an experienced attorney about their rights to file a discrimination/retaliation complaint with the Labor Commissioner’s Office or in a court of law. 
 

If you have any questions about whether an individual is properly classified as an independent contractor or an employee, please contact me for a FREE confidential consultation at (916) 333-4653 or Stephen_Fiegel_Esq@comcast.net.