Independent contractors are not entitled to overtime pay. It is important to know that independent contractors are not protected by California's anti- discrimination laws. For example, an independent contractor who works in California for a business based in Texas must be reported to California's EDD. Independent contractor laws and regulations are changing, due in part to the increase in remote workers, drivers, and unemployment benefit issues caused by the pandemic. Below we discuss the legal test for whether someone is improperly classified as an “independent contractor” under California independent contractor misclassification law. 3. Someone who only works for a single company, ever, usually must be classified as an “employee.” A legitimate independent contractor, under the ABC test, is someone who is in-business for themselves. It did not matter that there was an independent contractor agreement. He can do it himself or hire someone else and supervise, he could work for other companies, and he presents himself as being an independent business person.19. For more information, please visit the Labor & Workforce Development Agency Employment Status Portal. The determination as to whether someone is an employee or an independent contractor is one of fact.7 The Labor Code view favors the idea that you are an employee.8, “Any person, rendering services to another, other than as an independent contractor… is presumed to be an employee.”9 The burden of proof is on the employer to prove that someone claiming to be an employee is an independent contractor.10, Just because someone is called an independent contractor in their business relationship does not mean that they are one.11. In California, the vast majority of workers are covered by workers’ compensation. If a court determines that you were really an employee, and misclassified as an indepentent contractor, you may be entiled not only to workers comp benefits but also to file a wage and hour lawsuit in California for unpaid wages, overtime and failure to give meal and rest breaks. Shouse Law Group is here to help you fight back. Edward is an independent contractor because he has control over his work. Independent contractors are not eligible for workers’ compensation benefits unless it can be established they are a traditional employee. Under the third part of California’s independent-contractor test, an employer must prove that the worker is “customarily engaged” in a business, occupation, or trade that is independent from the company. Whereas if you are classified as an employee, your employer has to: Independent contractor status may be used as a “subterfuge” to avoid employee status, meaning that an employer may falsely claim that you are independent contractor in order to avoid paying you workers’ compensation benefits. If the employer fails to prove any of the three “ABC”s, the worker must be classified as an “employee” rather than an “independent contractor.” Or, stated another way, an “independent contractor” is misclassified if the company fails to prove all three of the above requirements. Independent contractors do not qualify for benefits, no matter how severe the injury. She is found to be an employee of the property management company. Among other things, the following rules apply to employees, but not to independent contractors: employers must withhold state and federal payroll taxes for their employees employers must provide workers’ compensation insurance for their employees Determine whether or not your worker is an employee or an independent contractor. But their workers can file a lawsuit for misclassification and can recover penalties as high as $25,000 per worker. The insurance company claims she is an independent contractor. Under the overtime laws, you are entitled to pay if you work for more than: 8 hours in a workday The test for independent contractor status is one of how much control the employer has over the employee and how they get their work done.12 There are many additional factors that can be considered to make this determination: Rider-share drivers are typically independent contractors. The difference is important if you are injured doing work for an employer. Copyright © 2020 Shouse Law Group, A.P.C. In January 2020, a federal judge granted a preliminary injunction to the California Trucking Association which temporarily prevented the law from applying to independent truck drivers and motor carriers. Differences: California vs. Federal Labor Law. employees are improperly classified as independent contractors. The insurance company may deny your claim because you are not an employee. A man walks in with knotted dreadlocks that haven’t been cut or groomed in 4 years. To find out whether you are an independent contractor or employee you should understand: Independent contractors do not get workers’ comp benefits. Contact us for a free consultation. The penalties for independent-contractor misclassification in California are the largest that the labor code has to offer. Comp. The “ABC test” is the most favorable test for independent contractors trying to prove that they are entitled to “employee” status. California law requires employers to have workers’ compensation insurance for their employees. Independent contractors do not receive workers’ compensation benefits. If the insurance company does not prove that you are an independent contractor, then you qualify for benefits including medical treatment, mileage reimbursement, temporary disability benefits, permanent disability benefits, death benefits in the case of fatalities at work, and supplemental job displacement benefits. The recipient of the services or products does not deduct your social security payments or tax withholdings from your payments. Businesses operating outside California are subject to this law as well. As an Independent Contractor, Can I Work for More than One Client? Luiz works a job that turns out to be surprisingly complex, and it takes 8 hours instead of the typical 2 hours. She earns $20 for every hair cut she performs. This field is for validation purposes and should be left unchanged. California's Fair Employment and Housing Act (FEHA), however, protects independent contractors against workplace harassment. However, some employers may misclassify you as an independent contractor, yet in reality, you are an employee. ABC test. Example 1:  Luiz is a security alarm technician who is classified as an independent contractor. To validly classify someone as an independent contractor under California law, the company must prove that the worker’s job functions fall outside the company’s core business. Recently, California made headlines when it stated that it was making changes in the Contractor Law. Example: A gardener does yard work for a restaurant and is considered an independent contractor, not an employee of the restaurant because: Example: Edward works for AAA Security Co. installing security alarms. “Willful misclassification” of an independent contractor means knowingly and voluntarily misclassifying a worker as an independent contractor to avoid employee status under California law. Terry is misclassified as an independent contractor under California law. Edward moves to an area where AAA no longer operates, but he still wants to work for them. This agreement did not mean anything by itself. If you have not actually chosen these items, then there is a question of whether you are actually an independent contractor. He did the same type of work for many different clients, No one from the restaurant told him how to do his job, https://www.dir.ca.gov/dlse/faq_independentcontractor.htm, Chubb v. WCAB ( Sherman) (1989) 54 Cal. In contrast, a delivery company may be allowed to classify the security guards at its headquarters as “independent contractors.”. Speak confidentially with one of our attorneys. You could represent yourself in small claims court, but filing a small claims case in California will limit the amount you can recover to $10,000. Whether the person performing services is engaged in an occupation or business distinct from that of the employer; Whether or not the work is a part of the regular business of the employer; Whether the employer or the worker supplies the tools and the place for the person doing the work; The alleged employee’s investment in the equipment or materials required by his or her task or his or her employment of helpers; Whether the service rendered requires a special skill; If the job type is usually done by independent contractors or employees. Contact an experienced employment lawyer today to learn how AB5 effects your job and classification. In such a scenario, you will be entitled to overtime. However, it is possible your employer misclassified you as an independent contractor.  If you’ve been misclassified as an independent contractor, you may be entitled to damages and labor code penalties, which can quickly add up to large amounts of money. California law requires that employers, including those in the construction industry, carry workers' compensation insurance, even if they have only one employee. California law requires companies to provide workers’ compensation benefits to W2 employees. Employees are entitled to a wide variety of protections under federal and state law. He works an eight-hour day, is paid hourly, and gets vacation and medical benefits. Currently we are representing individuals for misclassification as an independent contractor in our Lyft lawsuits and DoorDash lawsuits. Our attorneys often represent workers in class actions, private attorney general lawsuits, and in arbitration. Luiz gets $40 for the whole job, a wage of only $5 per hour. The California legislature stated that it intended “to ensure workers who are currently exploited by being misclassified as independent contractors instead of recognized as employees have the basic rights and protections they deserve under the law, including a minimum wage, workers’ compensation if they are injured on the job, unemployment insurance, paid sick leave, and paid family … The worker is in-business for themselves, not just employed by the company. While AB5 applies to most California workers, there are some workers who are exempt from the law. Edward and AAA agree that he would service the AAA security systems in this area. Shouse Law Group has wonderful customer service. Generally, arbitration awards are significantly higher for parties represented by an attorney, compared to parties that represent themselves. Our attorneys can help you file a lawsuit to recover damages and penalties for being misclassified as an independent contractor. Shouse Law Group › Workers Compensation › Independent Contractor. Updated November 11, 2020. Example: A package delivery company says their drivers are independent contractors, but they would actually be considered employees because they: Example: James is a high school student who sells and delivers newspapers. Under California law, an employer does not have to cover their independent contractors for workers’ compensation claims. Find out. We may be able to help you gain recovery. He gets his own liability insurance. No. A California employee is any person in the service of an employer, whether with an oral or written contract, whether lawful or unlawful.3, A California independent contractor is a person who works for a specific fee and result. As we have previously reported, California law utilizes the “ABC” test to determine if workers are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission.  If you think you were misclassified and are entitled to a recovery, what are your options for suing? How do I obtain benefits if my employer says I am an independent contractor and not entitled to California workers’ compensation benefits? The distinction between these arrangements can have dramatic consequences for workers and companies. You may appeal any denial of benefits in a California workers compensation case. However, some employers misclassify employees as independent contractors to avoid paying payroll taxes and workers' comp premiums for them. This also allows them to avoid paying for the contractors workers compensation insurance. Those can include the right to overtime pay,⁠ 4 the right to meal breaks,⁠ 5 and the right to a minimum wage.⁠ 6 In California, there are several legal tests to determine whether a person is an employee or independent contractor. Please complete the form below and we will contact you momentarily. An employment-law litigator with over 20 years’ experience, Steven Tindall is well-acquainted with navigating the ins-and-outs of independent-contractor misclassification lawsuits. He uses a company truck. Under this law, which went into effect on January 1, 2020, a California court will presume that a worker should be an employee, unless the employer can prove three things (the “ABC“s): The company must prove that the worker is free from its control in performing the work. However, sometimes employers incorrectly classify workers as independent contractors when they are 4th 1, Lara v. Workers’ Comp. When you file a claim for California workers’ compensation benefits, the insurance company may deny your claim based on the defense that you are an independent contractor. If she’s misclassified under California law, she’s entitled to earn at least $11 per hour for that haircut, or $33 total. The company pays him a rate of $40 per installation (regardless of how long it takes). Therefore, any worker performing services for a contractor who is injured on or after October 26, 2010, will be presumed the employee of that contractor for workers' compensation purposes, subject to the independent contractor Filing an Application for Adjudication of Claim and Declaration of Readiness To Proceed will put your case before a judge to decide if the insurance company is correct. In 2019, the California legislature passed Assembly Bill 5 (AB5) which codified the California Supreme Court decision. She works with a property management company that supervises apartment complexes. 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