Worker misclassification occurs when an employer hires an independent contractor into a role that does not meet the definition of an independent contractor and the person should have been hired as an official W-2 employee.
Why does this happen? It happens for a variety of reasons, but one of the main reasons is that the employer believes that they will not have to pay employment taxes, benefits, worker’s compensation costs, etc. if the person is an independent contractor rather than an employee. Here is more about what you need to know about worker misclassification.
Common Situations To Raise A Red Flag
- You should contact an employment lawyer if you were an employee and your position was reclassified as an independent contractor.
- You should contact an employment lawyer if you feel that your job description and duties do not fit the role of an independent contractor.
- You should contact an employment lawyer if your position requires you to put in overtime without overtime pay, especially if your job was once as an employee where overtime was paid.
Does Your Classification Matter – Employee vs. Independent Contractor
It matters a great deal whether you are classified as an employee or as an independent contractor.
- Independent contractors may have to pay higher employment taxes as they are required to cover the “employer” portion of employment taxation. That means that in addition to regular income tax and FDIC, they may also have to pay additional social security and other taxes that would normally be covered by the employer.
- Most independent contractors are not paid overtime. Overtime payment is part of the employment law, but it does not apply to independent contractors. Employers can save a lot of money by classifying a paid position as an independent contractor rather than as an employee. This is why it’s important to understand the laws, so misclassification does not occur.
- Independent contractors are not covered by worker’s compensation insurance. That means if they are hurt while working, they must pay for their own medical care. They will also not be reimbursed for lost wages unless they pay for a personal insurance policy.
- Most independent contractors are also not covered by unemployment insurance unless they buy a private policy that offers that coverage.
- An employee is covered by worker’s compensation, sometimes offered benefits, such as healthcare, is often paid overtime, unless exempt, and is covered by the California Labor Code as a form of protection from discrimination in the workplace. Independent contractors are not usually covered by any of these benefits.
Contact DLaw If You Suspect Misclassification in California
DLaw offers employment law services to employees within California. If you are an independent contractor, and you feel that you should be classified as an employee with all the benefits that go along with being an employee, you should reach out to our team. We will help you determine your legal rights as an employee or contractor within California and discuss with you the legal options available to protect yourself against employer abuse.