I work for a construction company and my boss never pays his guys on time. He makes them drive out to the office only to send them home. He says that because they are 1099 employees they have no rights. Do they have to pay taxes? and is it legal for their checks not to show up on time?
This an excellent question you have posed which involves a number of different laws, both State and Federal.
On the Federal side, there is a law called the Fair Labor Standards Act ("FLSA") which has provisions which require certain minimum payments for labor which has been performed. Independent contractors do not typically receive the full protections of the FLSA, but the determination of whether you are, in fact, an "independent contractor" requires much more than your employer simply labeling you as one. The employer may call you an independent contractor, when in fact you are not. I have been involved in many lawsuits where this has been the case.
On the State level, there a number of CA "pay day" laws which serve to protect employees and ensure them timely payment of earned wages. I am not licensed in CA and can only recommend that you speak with a competent CA employment attorney on this issue who has experience in litigating wage issues.
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Judd G. Millman
606 Bosley Avenue, Suite 3B
Towson, Maryland 21204
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Ms. Karila is absolutely correct. I write separately only to point out that, in California, you are presumed to be an employee, and the employer must prove that you are a contractor. The main test is one of control. If your employer tells you when to show up, where to go, what job to work on, when to leave, and provides your tools, these are all indicia (although not necessarily proof) of the employment relationship.
Good luck in your legal matter.
Craig T. Byrnes
I urge you to consult with one or more experienced employment law attorneys with whom you can discuss the details of your situation. It sounds like you and the other employees are being taken advantage of. As individuals and as a group, there may be legal remedies that will provide compensation for you. To find a plaintiffs employment attorney in California, please go to the web site of the California Employment Lawyers Association (CELA). CELA is the largest and most influential bar association in the state for attorneys who represent working people. The web site is www.cela.org. Click on "Find a CELA Member" and you can search by location and practice area.
Other responses already pointed out the issue of whether you are employees or independent contractors. The main issue in determining who is an employee and who is an independent contractor is who controls your work. The general rule is that a person is an independent contractor if the employer has the right to control or direct the RESULTS of the work but not HOW the work is done or even WHAT work is done.
Many employers misclassify workers as independent contractors and pay them as "1099 employees" when in fact they should be classified and paid as regular W-2 employees. Employers receive a substantial benefit from doing this, but there is NO benefit to the workers. If you are wrongly classified as an independent contractor instead of an employee, you will not be eligible for many benefits of employment or your eligibility will be reduced. Areas affected include the right to:
– be paid for all hours worked or controlled by the employer;
– the legal minimum wage;
– overtime pay;
– rest and meal breaks;
– workers' compensation insurance;
– Social Security contributions;
– unemployment benefits;
– state disability benefits;
– employer benefits such as vacation, sick leave, pension, medical insurance, etc.
Also, in some states, including California, employers are subject to a penalty if they misclassify employees as independent contractors (see below).
There are different ways to determine if a worker is an employee or independent contractor. Employers must comply with all relevant laws.
FEDERAL TAX LAW: The Internal Revenue Service (IRS) looks at three areas to determine a worker’s status:
Behavioral Control: This area considers instructions and training. If the employer has the right to direct or control your work, even if it does not exercise that right, you are an employee. Therefore, if your employer gives you detailed or extensive instructions on how to get the job done, you are probably an employee and not an independent contractor. These instructions might include when to do the work, or how and where to do it; what equipment or tools to use; who you can hire or not hire to help you; what supplies and services to buy, and/or where to buy them. If the employer trains you in required methods of doing the work or the procedures to get the work done, this is evidence the employer wants things done its way, which indicates you are an employee and not an independent contractor.
Financial Control: This area considers who has the right to direct and control the business, not just the work. The more of a financial or promotional investment you have made in the work, the more likely you are an independent contractor. However, there is no requirement for an investment in order to meet the definition of independent contractor. If you incur expenses in performing the work but are not completely reimbursed, you are more likely to be an independent contractor rather than an employee, especially if these expenses are high. If you have the chance to make a profit or loss on the work, you are probably in business for yourself and therefore an independent contractor.
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