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Independent Contractor Misclassification

Are you classified as an "independent contractor" by your employer? If so, you may be entitled to recover significant damages, including unpaid wages, penalties, and interest.

Why? Because when a company misclassifies an employee as an independent contractor, it deprives the employee of basic rights, including minimum wages, overtime wages, meal periods, paid rest breaks, reimbursement of expenses (such as cell phone expenses and/or gas mileage), among others.

For this reason, if you are or were classified as an "independent contractor," please contact Fernandez & Lauby LLP by calling 888-959-8508 for a free consultation to discuss whether you may be entitled to significant unpaid wages and other damages.

For more detail regarding the differences between an employee and an independent contractor, please read below.

Many companies classify their workers as "independent contractors" when, in reality, the workers are actually employees under California law.

Whether this misclassification is accidental or purposeful, this is an illegal practice that deprives the employee of basic rights and typically causes a negative impact on a large group of other misclassified workers.

Thankfully, under California law, a company does not simply get to decide whether their workers are employees or independent contractors. In fact, California law assumes that anyone who provides a service to a company is an employee, rather than an independent contractor.

California law uses an "ABC Test" to determine whether a worker can be properly considered an independent contractor, and, under this test, the company must prove each of the following:

  1. That the worker is free from the control and direction of the company in connection with the performance of work, both under the contract and in fact;
  2. That the worker performs work that is outside the usual course of the company's business; and
  3. That the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the company.

Part "A" analyzes the amount of control that a company has over the worker, and can be understood through a few simple questions:

  • Does the company schedule your days and hours of work?
  • Does the company set specific deadlines by which your work must be completed?
  • Does the company require you to use their vehicle or wear their uniform when performing the work?
  • Does the company control the way that you perform your job?
  • If the company gave you specific instructions regarding how to perform a task, were you forced to follow the instructions? And, if you did not follow the instructions, would you be disciplined?

These are all signs that you are subject to the control of the company and should be classified as an employee - not as an independent contractor.

Part "B" is rather straightforward as well. If you are classified as an independent contractor but performed work that is the core business of the company, you should be classified as an employee.

  • For instance, a solar salesperson that sells services (such as the installation of solar products), for a solar company should be classified as an employee, because that person is performing the primary business of the company.
  • Similarly, a truck driver that picks up and delivers loads for a trucking company is likely performing the only services that the company provides. As such, the truck driver should be classified as an employee.
  • However, when a retail store hires an outside plumber to repair a leak in a bathroom on its premises or hires an outside electrician to install a new electrical line, the services of the plumber or electrician are not part of the store's usual course of business and those individuals may be properly classified as independent contractors.

For Part "C", a company must prove that the worker is customarily engaged in an independently established trade, occupation, or business. In this regard, it is not enough for a company to claim that a worker could have provided his or her services for another company - instead, the company must show that the worker operated a separate business through evidence such as business licenses, business cards, company invoices, an office location, other customers serviced by the worker, and so forth.

A company must prove each of the above elements (A, B, and C) in order to show that it properly classified its workers as independent contractors. It is also important to note that even if a company requires its worker to sign an "Independent Contractor Agreement," this fact is irrelevant because California law looks to the ABC Test described above to determine whether a worker is properly classified, not the arbitrary labels that the parties use to describe each other.

Employees that are misclassified as independent contractors can recover significant amounts of unpaid minimum and overtime wages, wage premiums for denied meal and rest breaks, the reimbursement of business expenses (such as cell phone expenses and/or gas mileage), as well as various penalties and interest that attach to these violations.

If you performed work for a company as an independent contractor and believe that you were misclassified, please contact the attorneys at Fernandez & Lauby LLP at 888-959-8508 for a free consultation.

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