INDEPENDENT CONTRACTORS AND UNPAID WAGES
California employers often improperly classify their employees as independent contractors rather than employees. When a worker is paid as a 1099 independent contractor rather than an employee, the company and does not need to pay minimum wage or overtime, saves on payroll taxes, medical coverage, social security and workers compensation insurance, among other expenses. Additionally, companies do not need to comply with meal and rest period requirements or other wage and hour laws. Misclassification of employees in San Diego and throughout California as independent contractors isn’t always intentional and is sometimes due to an employer’s negligence, lack of knowledge or carelessness about the law.
INDEPENDENT CONTRACTORS CAN RECOVER DAMAGES
Workers that are misclassified as independent contractors are nevertheless deemed employees under the law and are entitled to receive the wide range of employment and wage and hour benefits. Workers who are misclassified may nevertheless seek and obtain payments for unpaid wages, missed meal and rest periods and employment-related business expenses. Depending on the length and scope of employment, the payment can be significant.
FACTORS FOR INDEPENDENT CONTRACTORS VS. EMPLOYEES STATUS
As of April 2018, California courts hold that workers are presumed to be employees rather than freelancers or independent contracts unless the employer can prove all three of the following factors:
- The worker was free from the control and direction of the hirer in connection with his or her work duties. Companies must prove that the work agreement allowed for the worker to have independence in performing his or her duties and that the worker was in fact free from the company’s direction and control.
- The worker must perform work that is outside of the company’s usual scope of business. This means that a janitorial company can hire a web development freelance worker to do website work, but cannot hire other janitors as independent contractors.
- The worker was customarily engaged in an independently established trade, occupation or business of the same nature as the work performed for the company.
INDEPENDENT CONTRACTOR “AGREEMENTS”
An “independent contractor agreement” alone is not sufficient to create an independent contractor relationship. If the worker performs duties similar to that of a regular employee, the worker is entitled to California’s labor and employment protections as an employee of the company.
DAMAGES FOR MISCLASSIFICATION
- Payment of the full amount of unpaid wages and expenses
- Interest on the amount owed
- Waiting time penalties (up to 30 times the amount of unpaid wages owed)
- Wage statement penalties (up to $4,000 per employee)
- Liquidated damages (double pay)
- Punitive damages
- Attorney’s fees and costs
Recoverable damages increase if the employee should have been paid on an hourly basis, rather than on a fixed rate contractual basis, as the “1099 employee” would be misclassified as exempt in addition to his or her misclassification as an independent contractor.
FERRARO EMPLOYMENT CAN MISCLASSIFIED EMPLOYEES
Misclassified workers can file a wage claim or make a demand for payment as an employee. Companies that retaliate against an individual for questioning his or her misclassification are liable for additional damages. If you believe that you are misclassified, call us for a free case evaluation with a San Diego employment lawyer.