Workers are presumptively employees when they provide a service to a company. However, sometimes companies will intentionally misclassify an employee as an independent contractor, and not an employee, in order to deny the employee rights, benefits, and protections that accompany employee status under California law. This is not legal and California has specific laws in place to avoid these cases. An employer who violates these laws is subject to significant penalties and must also pay the employee any unpaid wages that resulted from the misclassification.
First, an employer cannot unilaterally determine a worker’s status simply by assigning the worker the label “independent contractor” or by requiring the worker, as a condition of hiring, to enter into a contract that designates the worker an independent contractor. The California Supreme Court adopted the ABC test in Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903. Under the ABC test, a worker is considered an employee and not an independent contractor unless the employer satisfies all three of the following conditions:
- The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact. In other words, companies cannot manage independent contractors in the same way that they would manage employees. They cannot control their schedule or the manner in which they perform their job. The manner, schedule, and hours that an independent contractor performs their work are entirely up to the contractor – not the employer.
- The worker performs work that is outside the usual course of the hiring entity’s business. This means that if a cleaning company hires someone to perform cleaning services, the workers cannot be considered an independent contractor because his/her work is within the habitual business course of the company.
- The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed. A good indicator of independence of established trade is that the worker doesn’t rely on one single employer but on many clients.
Employees should review their paystubs and payroll documents to make sure that they are properly classified as employees so that they receive the rights and protections they deserve! If you believe you have been misclassified, we are here to help. Please contact our office for a free and confidential consultation.
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