What You Need to Know About Independent Contractor Misclassification

Author: Mesriani Law Group
Posted on: December 2, 2020

Independent contractor misclassification denies workers of their rights and it a common problem throughout California workplaces. Contract misclassification happens when an employer hires a worker and treats him or her as an independent contractor even though employment law says the worker is an employee.

Here’s what you need to know:

Exempt and Nonexempt Status

Every California worker is categorized into one of the two classifications: exempt or non-exempt.

But what’s the difference between the two categories?

California employment law requires employers to follow the state’s requirements regarding minimum wage, rest and meal breaks, and any other condition of employment with non-exempt workers. However, state law doesn’t require employers to comply with those requirements for exempt workers.

One of the most important things that California workers should know is that although exempt workers do not qualify for overtime pay, nonexempt workers do. Making sure you are correctly classified is essential to ensure you are properly compensated.

What is an Independent Contractor?

An example of an exempt worker is an independent contractor.

Unfortunately, many employers often misclassify workers into this category. Some employers intentionally misclassify workers as independent contractors to avoid complying with state law. Employers benefit from this by withholding up to thousands of dollars of wage or other benefits from misclassification.

But an employer can’t just classify a worker as an independent contractor because they want to. The worker must meet specific requirements to be correctly classified into this category.

ABC Test for Independent Contractor Misclassification

Under the ABC test, a worker should be considered an employee instead of an independent contractor unless all three of the following conditions are met:

  • The worker is free from the direction and control of the employer in regards to the performance of the work (according to the contract and in the actual performance of the work)
  • The worker performs work outside of the usual course of business
  • The worker is routinely engaged in an independently established occupation, trade, or business of the same nature as the work performed

Even if one of the above conditions is false, the worker is not an independent contractor; the worker is an employee.

Examples of commonly misclassified workers include salespersons, healthcare workers, IT workers, construction workers, salespeople, and gig workers.

Consequences of Misclassification

If an employer misclassified an employee as an independent contractor, the employer may owe that employee compensation for unpaid overtime or missed breaks.

It’s important to understand the difference between the two categories and make sure you are correctly classified.

Consult with our Independent Contractor Misclassification Attorney Today

Independent contractor misclassification is one of the most common mistakes that an employer can make. Since federal and state laws can be quite complex, employees can have a difficult time figuring out if they should be classified as an independent contractor or an employee. But our expert labor law attorneys can help. We are confident that our experienced employment attorneys can obtain the maximum compensation for your case and offer a “no win, no fee” guarantee. Contact Mesriani Law Group today for your free legal consultation and let us help you get the justice you deserve.