Misclassification

In 2011, California state legislature passed Senate Bill 459, prohibiting the willful mis-classification of individuals as independent contractors. This new legislation creates civil penalties of $5,000 to $25,000 per violation. It also prohibits charging fees to or making deductions from the compensation paid to those mis-classified workers.

Mis-classifying employees who regularly do services for the same employer, as independent contractors, can be advantageous for employers for several reasons:

• Independent contractors are not covered by California’s minimum wage and overtime protection laws.
• Independent contractors do not receive workers’ compensation coverage if they are injured on the job.
• Independent contractors do not have family leave or unemployment insurance.
• Independent contractors do not have a legal right to organize or join a union.
• Independent contractors do not have protection against employer retaliation.

The mis-classification of an employee as an independent contractor creates an unfair advantage for an employer, as the employer avoids paying these benefits that an employee is otherwise entitled to receive, including unemployment insurance, disability insurance, social security contributions, and paid sick leave.

An employee can be distinguished from a contractor in the following ways:

Typically, a contractor can operate independently without a company telling them exactly how and when a job must be done. A contractor does not report directly to anyone at the company as a regular supervisor, and is not required to be on site at the workplace for specific hours. An employee is typically told exactly how and when a job must be done. An employee reports directly to their employer at the company, and is usually required to be on site at the workplace for specific hours. Independent contractors, such as computer maintenance and repair, copier maintenance and repair, typically work for multiple companies.

If you believe that your employer is wrongfully classifying you as an independent contractor when you should be classified as an employee, please contact our office at (310) 477-7767 or fill out the form here to schedule a free initial consultation.