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If I'm a full-time employee being paid as a "contractor". Do I still have rights?

Los Angeles, CA |

I work for a small company that hires employees for full-time positions but does not put them on W-2. I have seen many people become depressed here. All quit or are fired. It is a cycle. The owners create a hostile working environment. Recently there was a threat to fire us all. There is no HR. I fear that if I state the conditions are unfair, I will be fired. They do many things that are illegal yet no one says anything, myself included. Do I have rights? Can I sue this company for abuse?

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Attorney answers 5


Yes, you absolutely do have rights and do not deserve to be subject to illegal actions by your employer. A full consultation would be needed to properly advise you. Consult with an employment law attorney.


If you are truly an employee, then you are being misclassified and being deprived of benefits like worker compensation, disability, the employer's payroll tax contributions as well as the protection of the wage and hour laws, i.e. the right to minimum wage, overtime, meal and rest breaks, etc.

You can file a complaint for misclassification of an employee as an independent contractor with the Division of Labor Standards Enforcement online. For useful useful information and a link to the online complaint form go to:

You can also report the inaccurate 1099 online on the IRS website. If you fail to do so, the government will charge you tax on the full amount claimed by your former employer and allow the former employer to take an undeserved deduction in that amount. In addition, your former employer is apparently misclassifying you to avoid payroll taxes and forcing you to pay self employment tax.

You can also consult an attorney, who can assist you and you may be able to recover your reasonable legal fees. Labor Code 218.5

If you are an employee, you have additional legal protections against retaliation for asserting your legal rights.

If you are dependent on your job, you consider considering document your claim and waiting until near the end of the statute of limitations period, which may be three years through the labor commissioner and four years if you sue under the unfair business practices law.

Whether the employer is creating a hostile work environment is a different question, which cannot be answered from the facts presented. A threat to fire all the employees may be bad management, but it is not a hostile work environment. Typically, a hostile work environment must be severe and pervasive as well as motivated by an illegal reason such as discrimination against a protected class such as race, gender, religion, sexual orientation, military service, disability, etc. or opposing illegal conduct.


If you have been improperly characterized as an independent contractor, and you can prove as much, you have all of the rights that an employee would have. That means you may have been entitled to overtime pay and rest periods that you have not been provided access to. However, the problems you post about do not appear to be unlawful. Therefore, even if you are an employee, you may not have any right to complain about conduct that is "hostile" or that depresses you, or that are unfair. Those are not valid reasons for a lawsuit. Only if the conduct is being directed at you because you are a member of a protected class of people, or because you engaged in some form of legally-protected conduct would you have any right to a claim of unlawful conduct.

Many employees do not understand that rude, aggressive, unfair, irrational, mean and even evil conduct is not unlawful. It appears that even though you have the right of an employee to sue even though improperly characterized as a contractor, you do not have a right to sue for "abuse."

Good luck to you.

This answer should not be construed to create any attorney-client relationship. Such a relationship can be formed only through the mutual execution of an attorney-client agreement. The answer given is based on the extremely limited facts provided and the proper course of action might change significantly with the introduction of other facts. All who read this answer should not rely on the answer to govern their conduct. Please seek the advice of competent counsel after disclosing all facts to that attorney. This answer is intended for California residents only. The answering party is only licensed to practice in the State of California.


I agree with Mr. Pedersen and Mr. Kane. There is no such thing as a right to sue for "abuse." Unfortunately, employers have a right to be as abusive as they choose to be, and there is no law against it. They are not required to have an HR department. They can create a hostile work environment if that is what they choose to do, and there is no law against it (unless the environment is hostile based on a protected characteristic, like race, age sex, disability, religion, and some others).

It is, however, illegal to misclassify you as an independent contractor if you are in fact an employee. California has stiff penalties for intentional misclassifications. You will, however, want to have sufficient evidence to show that you are en employee. It would be illegal (if you are an employee) to retaliate against you for complaining about misclassification, but employers do illegal things all the time. Probably the most practical thing for you to do if you're unhappy there is to find another position, and then consider if you want to take legal action. Most likely, you'll have moved on by then and put this experience behind you, have no desire to sue, and that is the best result for all concerned.

I hope this information is helpful to you.

Craig T. Byrnes

Disclaimer: Please be aware that I am not offering legal advice, nor forming an attorney-client relationship with you. I am not representing you, nor doing anything to protect your legal rights. If you believe that you have suffered a legal wrong, take action before any statute or limitations expires, or your right to do so may be lost forever. Good luck in your legal matter.


It sounds like a horrible place to work. You are entitled to be paid properly if you've been misclassified as the other attorneys have mentioned. You should talk to an attorney about the other illegal practices going on because you may have other great potential claims that may be a basis for a lawsuit if you complained about them and were terminated for complaining.

Best of luck.

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