Within the state of California, all employees have the right to be classified correctly. This ensures they receive the proper entitlements and benefits for the appropriate worker classification. If the law is broken and an employee’s rights are violated by an employer misclassifying them, the employee has the ability to bring a lawsuit against their employer. Even if the misclassification was accidental and not intentional, a company engaging in this practice is breaking the law and can be penalized.
Worker classificationsare not simply titles within the company; they are formal IRS classifications that have important implications for both the employee and the employer. There are multiple worker classifications, including:
If an employee is misclassified as an independent contractor, they will often lose out on important rights and benefits that come with being employed in California. Essentially, businesses attempt to pass on some of their operating costs to employees by classifying them in ways that lower their responsibility to the employee. If misclassified, employees may miss out on many benefits afforded to them under the state’s labor laws and the Federal Labor Standards Act (FLSA), such as:
There are also significant tax implications that come with misclassifying W2 employees as 1099 contractors, as that classification determines who pays the employee’s portion of Social Security taxes or Medicare. It also affects IRS tax withholding obligations.
A recent employment bill, AB5, made classifying a worker as an independent contractor more difficult. Under this law, a worker is granted employee status unless the employer can prove:
If a worker does not meet all of these requirements, the worker must be presumed an employee by the employer and given the appropriate benefits in response.
If you discover that you have been misclassified by your employer, you have the ability to file a lawsuit to recover damages from this action. These damages can be recovered even if the misclassification was not intentional. Recovered damages can be in the form of:
If your employer owes you money due to misclassification, the court can impose interest on the amount owed. The employer may also be responsible for paying their worker’s attorney fees and court costs, as their actions forced the worker to sue to be made whole. Speaking with an attorney is the most effective way to determine the recompense that you may be able to recover if you were misclassified by your employer. If you have concerns about your classification, an attorney can also help you determine your correct classification.
Employers can also be penalized for any classification wrongdoing with fines anywhere between $5,000 and $15,000 per violation. If the employer’s actions were purposeful or created a pattern, that state may impose another $10,000 to $25,000 fine. Purposeful or willful misclassification is defined as knowingly and voluntarily misclassifying an employee.
A:The total value of the damages you can recover if you are misclassified by your employer depends on many factors, including the length of time you worked while misclassified, the amount of hours you worked, the difference between the pay you were receiving and should have been receiving, whether you were able to take adequate meal and rest periods, and if you are eligible for liquidated damages. It is possible to recover hundreds of thousands of dollars in a worker misclassification lawsuit or settlement. A labor attorney can help you recover the correct amount you are owed.
A:Worker classifications are formal titles used by the IRS that also entitle workers to different benefits and rights. For example, if a worker is classified as an independent contractor, they are responsible for paying their own state and federal taxes and do not get as many protections as workers that are considered employees. Incorrectly classifying a worker passes on business operating costs to the employee.
A:There are classes of workers that do not fall under AB5 and instead are subject to the Borello test to determine if they can be classified as independent contractors. Some of these positions include doctors, psychologists, veterinarians, lawyers, accountants, insurance brokers, engineers, and private investigators. An attorney can help you determine your classification under the Borello test if you fall within these professions.
A:If you believe you have been misclassified by your employer, it is important that you speak with an employment attorney before the statute of limitations passes. From the most recent infringement, you have 3-4 years to file a California wage and hour complaint against a business.
Taking on your employer in a misclassification lawsuit is likely to feel overwhelming and intimidating, especially if they are not willing to admit their wrongdoing. Some employers will even retaliate against workers that question their classification by reducing their hours or firing them. In these circumstances, working with adedicated legal teamlike Shirazi Law Firm, PC, can make all the difference.
Our client-focused employment law counsel can help you determine all your options for legal recourse and what damages you are entitled to pursue. We will be an invaluable source of information and support as you fight to ensure your employment rights are upheld.Contact Shirazi Law Firm, PC,for a consultation on your potential worker’s misclassification case.