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Misclassification of employees

The misclassification of employees is a serious issue in California and across the country. When someone is misclassified, he or she is not eligible for overtime pay or other benefits that those who are classified as employees are.

According to the U.S. Department of Labor, 14 states have signed an agreement called a Memorandum of Understanding. This agreement was originally signed between the Internal Revenue Service and the DOL. Now, those states have agencies and labor commissioners who have signed the MOU with the DOL's Wage and Hour Division as well as other agencies. The goal is to make sure employees are classified correctly and have the protections they are supposed to have.

Some of the protections and benefits that misclassified employees may not have access to are:

-- Family Medical Leave Act

-- Overtime pay

-- Unemployment insurance

-- Minimum wage

Employers reap the benefits when a misclassification of employees occurs. They don't have to pay minimum wage or overtime. They also don't pay workers' compensation premiums or FICA taxes.

When there is an employer-employee relationship present, minimum wage of $7.25 an hour must be paid and in most cases, any hours over 40 hours a week must be paid at time-and-a-half. There are also requirements for recordkeeping and for employing those under 18 years old.

If you believe you are misclassified, you have a right to speak up. You may find the advice of an employment rights attorney valuable or you can contact the DOL's Wage and Hour Division. The Wage and Hour Division also provides a fact sheet with important information on what constitutes an employee.

Source: Bononi Law Group LLP, "Overtime for Misclassified Employees" Aug. 23, 2014

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