Your Employee/Contractor Status and Why It Matters
If you are confused as to your legal status as an employee or an independent contractor, then you aren’t alone. Even the California Labor Code’s formal definition can be a bit difficult for lay persons, and frankly even attorneys, who do not work extensively in the field of employee rights. Per Labor Code §3353, an independent contractor is “any person who renders service for a specified recompense for a specified result, under the control of his principal as to the result of his work only and not as to the means by which such result is accomplished.”
Clearly, this definition can seem a bit slippery — and some employees may find themselves wondering if classification is really all that important. Furthermore, employers may try to take advantage of this imprecise interpretation and improperly label a worker as an independent contractor. Fortunately, the label placed upon you by your employer does not decide the issue. (S.G. Borello & Sons v. D.I.R. (1998) 48 Cal.3d 341, 349) Here are just a few reasons why your status as an employee, as opposed to an independent contractor, should matter to you.
- Independent contractors are allowed a great deal of freedom in terms of how, where, and when they complete their jobs. Employees, on the other hand, must generally follow established protocol and complete tasks in a set order according to an employer-determined schedule.
- Independent contractors must cover most of their own business costs such as travel, equipment, fees, etc. Employees, by law, are not responsible for such costs including the costs of a uniform. (Labor Code §2802)
- Independent contractors do avoid tax withholding upon being paid, and are allowed to deduct many of their business expenses from their tax report. However, independent contractors are still obligated to pay those withheld taxes on their own accord, and their tax filing process is many times more complex than that of regular employees. Similarly, independent contractors are not entitled to workers compensation benefits if they are injured while performing the job.(California Labor Code §3357) However, the employer carries the burden in terms of establishing that you are in fact an independent contractor.
- Employees are often owed work-related benefits such as healthcare, sick leave, paid vacation time, etc. Independent contractors, on the other hand, are not so lucky. Contractors are also usually exempt from overtime wage laws.
As you can see, many of your workplace rights and entitlements are determined by your status as an employee or contractor — and if your employer has been misclassifying you, then you could be missing out. For example, an employee misclassified as a contractor could potentially be owed thousands in unpaid overtime and vacation pay.
So how can you determine your status? Here are a few of the standards utilized by the California Department of Labor Standards Enforcement (DLSE) to determine worker status:
- Does the worker have control over methods, scheduling, and other details of their job? If so, they are likely an independent contractor.
- Is pay hourly or salaried? If payments are based on the completion of projects or reaching certain milestones, then the worker is likely a contractor.
- Does the worker have multiple clients? If so, then they are likely an independent contractor.
- Is the work completed part of regular business operations? The worker is probably an employee. One time projects and temporary stretches of work are often indicators that an individual is an independent contractor.
- Does the work involve an opportunity for varying profits or loss? The worker is likely a contractor. Employees, on the other hand, are guaranteed a fixed salary or hourly pay.
Do you suspect that you have been misclassified? Don’t let your employer get away with robbing you of job benefits, back pay, and all of the benefits and other compensation to which you are entitled! Contact Perrin Law Group today for a free consultation and find out if you have a claim for misclassification as an independent contractor!