Are you a employee or an independent contractor?

by | Aug 3, 2018 | Firm News, wage and hour |

It is not uncommon for California businesses, especially small companies or startups, to misclassify employees as independent contractors. The idea of using independent workers might be attractive to managers and executives, as it is typically cheaper and allows access to labor on an as-needed basis. However, your employement status should reflect the duties, responsibilities and risks you take rather than the desires of your employer to reduce payroll costs. 

One of the challenges you might face in determining the exact nature of your professional relationship with your employer is the fact that everyone’s job is different. For example, what would be your status if you were a sales expert who works on commission, has the freedom to track down independently-generated leads and works outside of the office? The answer might hinge on something as simple as whether your company reimbursed your travel and discretionary expenses. 

An Internal Revenue Service article on the subject states that the basic criterion for independent contracting is that the employer has the power to control your products rather than your methods. For example, a ride-sharing company might defend itself against your claims that you are an employee by asserting that it does not direct your schedules, routes or work locations, but rather provides a framework through which you could find fares and assesses your performance solely based on passenger reviews. 

This staunch defense is a common sight in these types of cases. Regardless of the type of work you do, it is unlikely that the company would enthusiastically admit the error if the evidence showed that you were misclassified. Proof of your misclassification as an independent contractor could leave your employer liable for employment taxes on the federal level. It could also result in a California court awarding you damages. Please do not think of this as legal advice. It is meant to provide informational context.