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Understanding misclassification of employees in California

On Behalf of | Dec 8, 2021 | Employment Law

When discussing employment issues in California, some are more prominent than others. In recent years, sexual harassment has come to the forefront. This is understandable given how common it is and the number of people who have come forward to talk about how they were mistreated in this way. Other types of employer wrongdoing include discrimination, wage theft and wrongful termination. One problem that is often understated but is persistently worrisome is employee misclassification. Workers who are subjected to this violation might not even realize that they are being misclassified, nor are they cognizant of the negative impact it can have on them.

The difference between an employee and an independent contractor

Workers who meet the criteria for being an employee have different rights than a person who is functioning as an independent contractor. There are certain hallmarks that differentiate an employee from an independent contractor. An employee is working for another person’s business while an independent contractor is running his or her own business.

Often, it is clear as to whether a person is an independent contractor. If, for example, the person is an outsider hired to put down carpeting in the office. That person is operating independently of the business that is getting the carpet and is an independent contractor and not an employee. However, if a company has a person whose job is to do that type of work such as a handyman or a maintenance person and they are asked to put down the carpet, they will be an employee.

Regarding payment, the employee gets paid hourly, receives a salary or is compensated for work completed (piece rate). The contractor is paid once the project has been completed. With the example above in which a person is hired to put down a rug, they will complete the job and then be paid – that is an independent contractor. If the employer provides all the equipment, tools and material for the job, then that is a sign the employee is working for the employer. If the person brings their own materials, tools and equipment, it is a sign of an independent contractor.

Independent contractors work for the employer temporarily. This is true even if the same contractor is hired for several different projects. The employee will have an ongoing and regular relationship with the employer. With an employee, the employer decides on all facets of the work. The independent contractor makes those decisions when not an official employee.

Key points to remember when concerned about misclassification

Based on the Fair Labor Standards Act (FLSA), the rules are in place regardless of any agreement or misunderstanding about classification. If an employee agrees to be categorized as an independent contractor, he or she will still be an employee if certain criteria are met. The employee might even agree to be misclassified. That does not change the reality that the work being done is that of an employee with the status accompanying it. Working offsite or with flexibility does not make a person an independent contractor. A written agreement saying the worker is an independent contractor does not make it so. The method of payment – cash, check or some other form of compensation – is not relevant either.

There are legal remedies if a worker has been misclassified

Not only does the classification impact wages and benefits, but it can be essential if the employee is terminated and is trying to get unemployment compensation. Employee rights are not superseded by the simple act of misclassification. When problems arise and there is a disagreement about how workers should be treated, compensated, what benefits they should have and more with misclassification a part or the entire foundation of the disagreement, it is imperative for employees to have assistance. Understanding employment law may require experienced advice and getting help is important to receiving what the person is owed.


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