I get paid an hourly rate based on an overall commission formula that has a high and low hourly cap. I work company specified hours from my own office using my equipment. I have been with this company approximately 4 years now. I have a "boss" that determines the hours of myself and the other workers (also independent contractors) Should I be getting paid as an employee or independent contractor?
I agree with my colleague above. There are number of factors that go into making a determination as to whether you are an employee or independent contractor. I would check out the following link to help you make that determination: http://www.dir.ca.gov/dlse/faq_independentcontr... Contact an attorney to discuss the matter further.
Take a look at my information below, and if you think you fall into the independent contractor category, speak with an attorney before you do anything. There are always consequences for taking action, and those must be balanced against time limits.
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 a worker is wrongly classified as an independent contractor instead of an employee, that worker will not be eligible for many benefits of employment or 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 the work, even if it does not exercise that right, the worker is an employee. These instructions might include when to do the work, or how and where to do it; what equipment or tools to use; who the worker can hire or not hire to help get the work done; what supplies and services to buy, and/or where to buy them. If the employer trains the worker 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 the worker is an employee and not an independent contractor. Therefore, if the employer gives the worker detailed or extensive instructions on how to get the job done, the worker is probably an employee and not an independent contractor.
(continued in Comment below)
As my colleagues have stated, there are many factors to consider and you should consult with an attorney to determine whether you should be paid as an employee or independent contractor. However, as a general rule of thumb, if your boss has the right to control the manner and means by which you perform your work, you are more likely an employee than an independent contractor. To be considered an employee, your boss should be controlling more than just the hours you work. For instance, you should consider whether your boss: controls your work, supervises your work, instructs you on how to complete your work, trains you, dictates your hours, provides work supplies, etc. If your boss is "willfully misclassifying" your status, he is subject to penalties of $5,000 to $25,000, depending on the circumstances. There are many more factors, so discuss your concerns with an attorney right away. I hope this helps!
For California employees, there is actually a pretty intense analysis involved in determining whether someone is an employee or an independent contractor. The law presumes you are an employee, but the employer can present evidence that you are not an employee (called "rebuting" the presumption). Length of time working for an employer is only one of many factors.
The most significant factor is whether the employer has the right to control the type of work you perform and the way you perform the work or complete the task. In addition, a court will look at other factors, including:
1. Whether the person performing services is engaged in an occupation or business distinct from that of the principal;
2. Whether or not the work is a part of the regular business of the principal or alleged employer;
3. Whether the principal or the worker supplies the instrumentalities, tools, and the place for the person doing the work;
4. The alleged employee’s investment in the equipment or materials required by his or her task or his or her employment of helpers;
5. Whether the service rendered requires a special skill;
6. The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision;
7. The alleged employee’s opportunity for profit or loss depending on his or her managerial skill;
8. The length of time for which the services are to be performed;
9. The degree of permanence of the working relationship;
10. The method of payment, whether by time or by the job; and
11. Whether or not the parties believe they are creating an employer-employee relationship may have some bearing on the question, but is not determinative since this is a question of law based on objective tests.
To properly answer your question, you should probably consult with an attorney, The employee/independent contractor analysis is fact-intensive and requires diligent fact-gathering.
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