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Classifying workers as independent contractors

It’s important that workers are classified correctly as employees or as independent contractors. Employees are protected by wage and hour laws, minimum wage requirements, overtime, rest breaks and overtime rules. Independent contractors may not have those protections.

Independent contractor factors

While there is no one clear test for classifying a worker as an independent contractor, in California a worker is considered an employee and not an independent contractor unless the company can demonstrate several factors.

Generally, if a worker provides services to other businesses, then he or she is considered an independent contractor. However, a court may consider the degree of control over the work, payments and the type of relationship between the parties in making a final determination.

It may consider whether the company has the right to control what the worker does and how he or she performs the job, whether the business aspects of the job are controlled by the payer, how the worker is paid, how expenses are reimbursed and whether are there employee-type benefits like a pension, retirement benefits or others.

It is not enough for the company to require the worker to sign a contract stating that he or she is an independent contractor or pay him or her by a 1099 instead of a W-2. This, in itself, does not change the proper classification of the worker and the employer can face penalties for misclassification. Also, an employee has a right to file a complaint or a lawsuit for misclassification and the employer cannot retaliate against him or her for doing so.

An experienced employment law attorney can provide guidance and advice.