What to Do If You Have Been Misclassified as an Independent Contractor in California? 2024

California’s dynamic, fast-paced, and competitive labor market is unfortunately no stranger to the trend of businesses classifying their workers as independent contractors rather than employees. While gig workers, like app-based drivers, are the most ubiquitous modern example of this, the trend towards using contract labor is being embraced by all sorts of industries.

While this arrangement can sometimes be a win-win, offering flexibility for both parties, other employees are sometimes deliberately misclassified. This is usually done in an effort to avoid paying these workers the benefits that would otherwise be mandated by state law, federal statutes, collective bargaining contracts, or corporate policies regarding direct employees. Working as an independent contractor can unfortunately deprive workers of important protections and benefits.

If you suspect that you are being misclassified as an independent contractor at your California job, you’re unfortunately not alone. Thankfully, you have recourse, and the employment law team at The Law Office of Frank S. Clowney III can help you seek it.

Understanding the Difference Between Employees and Independent Contractors in California

In California, a method known as the “ABC test” is used to determine whether a worker is an employee or an independent contractor. Here are each of the three criteria and how they’re assessed:

1. Control and Direction of Work – If you’re an employee, it means that your employer has a tight level of control over the work you do and how you do it. This includes dictating where and when you work, the tools and equipment you’re permitted to use, and the exact procedures that you must follow in completing your tasks. Independent contractors, on the other hand, have more freedom in these areas, such as setting their own schedules and following their own methodology in completing assigned tasks.
2. Relationship Between Work Done and the Employer’s Business – If the work you do is integral to the operations of your employer’s business, this strongly suggests an employee-employer relationship. Independent contractors are more likely to work on tasks that fall outside the usual scope of the company’s business operations. For example, the line cooks in the back of a restaurant would be employees of the restaurant because their tasks are integral to the restaurant’s ability to function as a restaurant. However, a graphic designer who was hired by the same restaurant to re-work the menu layout could reasonably be an independent contractor.
3. Engagement in an Independent Business – Somebody acting as an employee cannot be said to be operating their own business. Rather, they serve a specific role in an operation, within the structure provided and dictated by their employer. An independent contractor, on the other hand, is often a professional operating their own business (even if that business is operated under their own name as an individual venture) and selling services on a business-to-business basis.

The ABC test is a powerful rubric that can be used to help identify the misclassification of workers. It is important to recognize, however, that labor laws can be incredibly complex and are subject to the circumstances of each individual case. For help determining whether you are being misclassified at your job, contact The Law Office of Frank S. Clowney III to set up a consultation.

Taking Action Against Misclassification

If you have considered the ABC test, or consulted with a California employment attorney, and believe that you are being misclassified, you may be able to seek legal recourse. You may even be entitled to a settlement or judgment to compensate you for any benefits that were illegally withheld from you. Here is an outline of how to hold your employer accountable for illegal misclassification and set yourself on the path to justice:

1. Exhaustively Document Your Work Situation – Maintain a detailed record of your work activities, including tasks performed, time spent, and payments received. Also, keep copies of all contracts and communications with your employer.
2. Consult With a Knowledgeable Employment Attorney – The legal process to come can become very complex, and many employers will bring the full force of their vast legal resources to bear when trying to fight allegations of misclassification. One successful case can potentially lead to more cases from other employees, so employers are likely to use every legal tool at their disposal to stall or derail the proceedings. The Law Office of Frank S. Clowney III is well-versed in California labor laws and is committed to guiding working Californians through these difficult situations.
3. File Your Claim or Report – If you have been misclassified, you may be entitled to back pay for overtime, breaks, and other benefits. Depending on your attorney’s advice, you will move on to filing a wage claim with the California Labor Commissioner or pursuing a legal claim. You may also choose to report the misclassification to the California Department of Industrial Relations and/or the Employment Development Department, depending on the nature of your work.
4. Protect Yourself – Remember that California law prohibits employers from retaliating against workers who assert their rights. If your employer (or ex-employer) tries to strike back at you for reporting their misclassification of your role, you may be able to pursue further legal action.

FAQs

Q: What Happens If You Misclassify an Employee as an Independent Contractor in California?

A: If your employer is found to have misclassified your work, they may be legally obligated to pay you for any overtime and other state-mandated benefits. The exact punishment for misclassifying employees will depend on which state agencies get involved in your case and the extent of your employer’s violations and any other misconduct toward you.

Q: What Is the Penalty for Misclassifying Independent Contractors in California?

A: The exact punishment for misclassifying employees can depend on which state agencies get involved and the extent of the violations in question. At the least, employers will be compelled by law to provide misclassified employees any back pay that would be equivalent to the benefits that have been illegally withheld.

Q: Can I Sue My Employer for Misclassification?

A: Yes, but you may wish to consult with a reputable employment lawyer before proceeding. In some instances, filing one or more reports or claims with the state Labor Commissioner’s office, the California Department of Industrial Relations, and/or the Employment Development Department may be required before proceeding with a formal legal claim.

Q: What Is the Statute of Limitations for Misclassification in California?

A: An employee who has been misclassified as an independent contractor by a California business has 3 years from the time of the last offense, i.e., their most recent date of work for that employer, to file a claim. If the case includes a written employment contract being breached, the statute of limitations can be extended to 4 years. Note that this is for filing a civil suit against your employer. Individual state agencies may have their own specific rules and deadlines.

Your Trusted California Misclassification Attorney

If you believe that your employer is misclassifying you as an independent contractor to avoid paying you state-mandated benefits, protect your rights with powerful legal representation from the employment law team at The Law Office of Frank S. Clowney III. Contact us today to set up a consultation.