Employees have a number of rights in California that stem from their status as employees. By contrast, “independent contractors” are not afforded many of the rights and legal protections that employees enjoy. It is fairly common for companies to misclassify employees as “independent contractors.” This is typically done in order to avoid paying workers certain wages or benefits or to avoid employment laws. It is therefore highly important for employees to be able to understand the key signs that workplace misclassification has taken place.
California Laws Related to Employee Classification
California Labor Code Section 2775 helps clarify who is considered an employee as opposed to an independent contractor. Pursuant to the statute, a person providing labor services for money within the state is an employee as opposed to an independent contractor, unless all of the following conditions are properly met.
- (A) “The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.”
- (B) “The person performs work that is outside the usual course of the hiring entity’s business.”
- (C) “The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.”
According to California Labor Code Section 226.8, it is unlawful for any employer to willfully misclassify an individual as an independent contractor. There are major penalties for employers who misclassify workers. Employers can be fined no less than $5,000 and up to $15,000 for each violation. There are many key signs that misclassification has taken place.
Key Sign #1: Lack of Control Over How Work is Performed
Independent contractors are able to control numerous aspects of their work duties. This will typically include how, when, and where they perform their work. By contrast, employers tend to have a great deal of control over hours, processes, and job duties. When a company controls most, if not all, aspects of a person’s work, this is a key sign that the worker is actually an employee.
Key Sign #2: The Work Being Performed Is an Essential Part of the Business
As a general rule of thumb, employees are the ones who perform work duties that are essential to the operation of a business. This could include baking muffins at a bakery. By contrast, independent contractors perform job duties that are tangential to the operation of a business. This could include plumbers that fix the pipes in an office space. When the worker in question has an essential role for the business, this is a key sign that the worker is actually an employee.
Key Sign #3: No Independent Business or Additional Clients
Employees typically have one employer and do not advertise their services to other businesses. By contrast, independent contractors tend to have several clients and a business entity. They also engage in marketing to attract additional clients. When a worker has no independent business or other clients that they work for, this is a strong indication that the worker is actually an employee.
Key Sign #4: Employer Provides Equipment and Workplace
Employees typically use tools, equipment, and workspace provided by their employer. Independent contractors usually bring their own tools and supplies in order to perform their work. When a worker is provided everything that they need to perform their job by an employer, this tends to indicate that they are actually an employee.
Getting Legal Help After Employee Misclassification
If you suspect that you’ve been the victim of employee misclassification, there are several steps that you should take. You are able to file a claim through the California Labor Commissioner’s Office or Employment Development Department (EDD). You should also speak with an experienced employment law attorney.
Victims of employee misclassification may be entitled to numerous damages. This can include compensation for unpaid wages, overtime, and other benefits. Our team of employment attorneys at The Labor Champ are here to help you. We are committed to helping workers understand their legal rights and holding employers accountable for their misconduct. Whether you just have legal questions or are wondering if you are being misclassified, we are here to help. You can reach out to us anytime at 949-727-9300.
