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I have a strong feeling that my employer missclassified me as an independent contractor

Milpitas, CA |
Attorney answers 3

Posted

As to your specific question, no one knows the "deal" you have with our employer. If an employee, you don't "owe" your employer time. The rules differentiating employees from ndependent contractors have numerous benchmarks, including (but certainly not limited to) who determines when, where and how the services are performed.

The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here.

Posted

One of the considerations into whether you are an employee or an independent contractor is the degree of control the company has over how you perform your work, including your work schedule. A typical contractor is hired to do a job. The contractor should be able to schedule their own hours as long as the job is completed on time. If the company requires the contractor to come to work at its place of employment, at a per-arranged schedule, and work under the company's control, that is a factor indicating an employment relationship. Of course, there are many others factors to consider, depending upon the nature of the business and the service you are expected to provide. But I cannot conceive of how you would owe hours to your "boss" as long as the work gets done.

If you were misclassified there are many other issues that need to be explored, such as the violation of applicable labor laws and tax reporting requirements. As soon as you get over the flu, start contacting employment law attorneys in your area. You can use the "Find a Lawyer" function on Avvo as a good place to start.

They say you get what you pay for, and this response is free, so take it for what it is worth. This is my opinion based on very limited information. My opinion should not be taken as legal advice. For true advice, we would require a confidential consultation where I would ask you questions and get your complete story. This is a public forum, so remember, nothing here is confidential. Nor am I your attorney. I do not know who you are and you have not hired me to provide any legal service. To do so would require us to meet and sign written retainer agreement. My responses are intended for general information only.

Posted

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.

twitter.com/MikaSpencer *** All legal actions have time limits, called statutes of limitation. If you miss the deadline for filing your claim, you will lose the opportunity to pursue your case. Please consult with an experienced employment attorney as soon as possible to better preserve your rights. *** Marilynn Mika Spencer provides information on Avvo as a service to the public, primarily when general information may be of assistance. Avvo is not an appropriate forum for an in-depth response or a detailed analysis. These comments are for information only and should not be considered legal advice. Legal advice must pertain to specific, detailed facts. No attorney-client relationship is created based on this information exchange. *** Marilynn Mika Spencer is licensed to practice law before all state and federal courts in California, and can appear before administrative agencies throughout the country. She is eligible to represent clients in other states on a pro hac vice basis. ***

Marilynn Mika Spencer

Marilynn Mika Spencer

Posted

(continued from Answer above) 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 the worker has made in the work, the more likely the worker is an independent contractor. However, there is no requirement for an investment in order to meet the definition of independent contractor. If the worker incurs expenses in performing the work but is not completely reimbursed, the worker is more likely to be an independent contractor rather than an employee, especially if these expenses are high. If the worker has the chance to make a profit or loss on the work, the worker is probably in business for himself or herself and therefore an independent contractor. Relationship of the Parties – If the worker does not receive benefits such as medical coverage, vacation, or pension, the worker may be an employee or an independent contractor. However, if the worker receives benefits, the worker is probably an employee. If the worker is an employee, the employer must withhold income tax and the employee’s portion of Social Security and Medicare taxes. The employer must pay Social Security, Medicare and unemployment (FUTA) taxes on the wages the worker earns. The employer must give the worker an IRS Form W-2, Wage and Tax Statement, every year showing the amount of wages paid and taxes withheld from the worker’s pay. As an employee, the worker has the right to deduct unreimbursed business expenses from the worker’s taxes on IRS Schedule A if the worker itemizes deductions and meets the other requirements established by the IRS. If the worker is an independent contractor, the employer must give the worker an IRS Form 1099-MISC Miscellaneous Income to report what it has paid to the worker. The worker must pay his or her own income tax and self-employment tax, and may be required to make estimated tax payments during the year. The worker can deduct business expenses on IRS Schedule C of his or her income tax return. CALIFORNIA LAW: The main test in California is who has the right to direct and control the “manner and means” in which the job is performed. This is similar to the IRS’ Behavioral Control described above. California then looks at secondary factors, which include: Are the services provided on a long-term or repeating basis? Is the worker paid based on the time spent working? Are the services an integral part of the employer’s business? Does the employer establish the work hours? Does the employer determine how many hours will be worked? Does the employer dictate the order in which job tasks are to be performed? Does the worker spend all of his or her time working for one employer? Is the worker supervised? All of these factors tend to show the worker is an EMPLOYEE. Is the worker in a distinct occupation or trade? Are the worker’s services available to the general public? Can the worker hire, supervise and pay assistants? Did the worker make a substantial investment in facilities or services? Does the worker do the job without supervision? Is the worker highly skilled or working in a specialized field? Does the worker supply the tools and other materials used to do the job? Does the worker provide the location in which the work is performed? Is the worker paid at the end of the project? All of these factors tend to show the worker is an INDEPENDENT CONTRACTOR. Also under California law, an employer can be fined for “willfully misclassifying” an employee as an independent contractor. The amount of the fine ranges from $5,000 to $15,000 per violation. If there is a “pattern and practice” of willful misclassification, the fine can increase to $25,000 per violation.

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