Your designation as an “employee” or as an “independent contractor” is determined by how you do your work, not by your job title. If you are an employee, you are eligible for unemployment insurance, workers’ compensation, health/safety protection by Cal/OSHA, and protection against discrimination. You do not have these protections if you are an independent contractor.
What is the difference between an employee and an independent contractor? There is no one simple test; it is necessary to weigh several factors. Answers of “yes” to the following questions make it more likely you should be an independent contractor; “no” answers make it more likely you should be designated as an employee:
- Are you free from the control and direction of the business, meaning that you usually do your work without supervision?
- Is your work outside the regular business that is paying you? (For example, a painter at a school is more likely to be an independent contractor than a teacher.)
- Do you hold yourself out as an independent business? (For example, do you advertise your services to the general public?)
Reasons for Independent Contractor Misclassification
Employers misclassify for a wide range of reasons. While some employers do this in a deliberate effort to reduce payroll taxes and the cost of employee benefits, such as the following:
- Overtime pay
- Health care benefits
- Vacation pay
- Pension plans
- Safety equipment
- Job training
Other reasons companies misclassify their employees as independent contractors do this so they can commit unlawful acts and reduce the risk of being caught. Examples of this can include the following:
- Employing undocumented immigrants
- Preventing access to labor organizers
- Engaging in discriminatory hiring, promotion or termination
- Bypassing minimum wage laws
- Avoiding employee income tax withholding
- Ignoring OSHA job safety rules
Cash Awards from an Independent Contractor Misclassification Lawsuit
Workers who have been victimized by an independent contractor misclassification can pursue legal action against an employer. An independent contractor misclassification lawsuit can earn an employee money damages from the employer. Some of the compensation available to a plaintiff in an independent contractor misclassification can include:
- Lost wages
- Overtime wages
- Liquidated damages
- Vacation pay
- Benefits compensation
- Attorneys’ fees
- Costs of court
- Interest
If you believe that you have been misclassified it is important to contact a local employment law attorney that can help navigate you through all available legal outlets.