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Misclassification of Employees as Independent Contractors in California

Updated: Dec 1, 2022

Guide to Employee Misclassification in California


Employee classification is crucial in California labor law. Whether you're an employee or an independent contractor, your rights and employment benefits are directly affected. That said, let's look at their important distinctions, how they affect your employment, and what that means for potential employment claims.


Differentiating The Employee From The Independent Contractor in California


So, how would employment lawyers categorize employees vs. independent contractors? Here's a quick rundown:

  • Employees work for a company (usually on a long-term basis). They are paid a salary or an hourly wage to execute duties for the company. In exchange for having complete control over how the work is conducted, an employer must teach their own personnel and provide the necessary equipment for them to perform the job. Finally (and perhaps most critically), an employee does work that is part of the company's daily operations.

  • Independent contractors work for themselves. Independent contractors frequently do specialized work for several clients, have their own schedules, provide their own tools, and are their own bosses. When they work for a firm, they frequently do things unrelated to the organization's core business.

employee misclassification california

Why Is The Different Crucial In California Labor Law?

Under state law, employees are entitled to several protections and benefits that do not apply to independent contractors. Employees are eligible for the following benefits:

  • Meal breaks

  • Rest breaks

  • Overtime

  • Unemployment insurance

  • Social Security

  • Workers' compensation

  • Protections for minimum wage workers

  • Anti-discrimination laws

Such perks are not available to independent contractors. According to this rationale, if someone is misclassified as an independent contractor when they are truly an employee, they could lose thousands of dollars in salaries, benefits, and other perks.


The ABC Test For Independent Contractors In California

Since a lot is riding on the difference between an employee and an independent contractor, you must be clear on which type of worker you are.


One way to determine whether you're an independent contractor or not is the ABC test based on California Independent Contractor Law, whereas a worker is considered an employee unless:

  • Absence Of Control. The worker is free from the hiring entity's control and direction regarding the work's performance.

  • Business. The employee does work isn't part of the hiring company's normal operations.

  • Customarily Engaged. The worker is usually involved in an independently established trade, occupation, or company relevant to the current job.

If you fit neither of the above factors, then you might be considered an employee under California law. Since there are many more benefits to being an employee, workers misclassified as independent contractors might miss out on benefits and pay.


Contact a prescreened California Employment Attorney to help you ASAP if you've been misclassified. A lawyer can help you get evidence, request paperwork, and manage the claims process.


How To Deal With Worker Misclassification In California?


Willfully or purposefully misclassifying a person as an independent contractor is prohibited under California Labor Code 226.8. As a result, if your employer misclassifies you as an independent contractor on purpose, you might be entitled to compensation.

You may be able to receive damages for the following things if you file a wage and hour lawsuit:

  • Unpaid wages, salaries, breaks, and overtime

  • Penalties and interest

If the misclassification was willful, you might be entitled to liquidated damages equivalent to twice your unpaid salary plus interest.


For their violation, the employer may potentially be penalized. Each infringement could result in a fine for the employer. The act of deliberately and voluntarily misclassifying an employee as an independent contractor is known as willful misclassification.


That said, contact a California Employment Attorney before you make any moves. You want to ensure you take the right steps toward a successful claim.


Filing a PAGA Claim for Misclassification of Employees

In addition to the wage and hour litigation, you may be able to bring a PAGA claim. Employees can file claims against their employers for violations of the California labor code if they file a claim under the California Private Attorney General Act.


If you are successful, you will receive 25% of the penalty imposed on the company for breaking labor regulations. The state receives the leftover cash. This compensation is in addition to any award you may receive due to your wage and hour litigation.


misclassification of employees as independent contractors california

Taking Legal Action Against Your Employer Under Federal Law

Some employees opt to initiate a lawsuit under the federal Fair Labor Standards Act for worker misclassification. One of the benefits of filing under federal law is that if you are successful, you could collect double your unpaid pay plus interest.

However, there are no standard criteria to determine whether you are an independent contractor or an employee under federal law. Many criteria go into determining your employment status, making it more difficult to prove your case.

You should consider all of your options before bringing a claim for misclassification as an independent contractor. However, don't wait too long to take action because wage and hour claims, including employee misclassification claims, have deadlines.


Consult with a California Employment Attorney before making a decision.


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