Common Signs You Have Been Misclassified as an Independent Contractor in California (2024)

California’s workforce relies on the contributions of employees and independent contractors. The two job classifications may look similar, but there are important and distinct differences. Employees who have been misclassified as contractors could be missing out on key benefits. If you believe you have been misclassified, you should understand common signs you have been misclassified as an independent contractor in California.

Understanding the Difference Between Independent Contractors and Employees

The definition of an independent contractor comes directly from the Internal Revenue Service, and employers in any state must follow the federal guidelines when classifying workers as employees or independent contractors.

An individual is considered an independent contractor if the payer controls only the result of the work, not the methods used. Independent contractors are self-employed, and their earnings are subject to self-employment tax.

If an employer controls what and how work is done, the worker is not an independent contractor, even if they have freedom in execution. What matters is the employer’s legal right to control the details of the services performed.

Employees enjoy many benefits typically not afforded to independent contractors, such as tax contributions, healthcare benefits, paid time off, and retirement benefits.

Signs You Have Been Misclassified as an Independent Contractor in California

If you believe you have been misclassified as an independent contractor, you can hire an employment lawyer to review your case. Your employment attorney can look for these and other signs that you have been misclassified.

• Employer control over work: If your employer dictates what tasks you perform and how you perform them (including specific instructions on methods, schedules, and processes), it indicates an employee relationship rather than that of an independent contractor.
• Provision of supplies: Independent contractors are generally required to provide their own work supplies. Being supplied with tools, equipment, and other necessary materials by your employer is a strong sign of an employee relationship.
• Inability to work for other gigs: If you are restricted from working for other clients or businesses, this limitation could suggest you are an employee. Independent contractors usually have the freedom to take on multiple clients and projects.
• Regular and ongoing relationship: If you have a long-term, continuous working relationship with one employer (rather than working on a project-by-project basis), this indicates you may be an employee. Independent contractors are typically hired for specific projects that terminate at a certain point.

There are many other examples of situations that could suggest you are working in an employment capacity. An experienced employment law attorney can help you find out what your correct work classification is.

Benefits of Hiring an Attorney to Correct Your Classification

Employment law is complicated, and the difference between an employee and an independent contractor is not always obvious. Usually, there are several factors to consider rather than just one. An employment law attorney can review your case and determine which steps need to be taken.

One possible course of action would be for your attorney to notify your employer that you are misclassified and should be given overtime and employment benefits.

The total value of damages you can recover for misclassification depends on factors such as the duration of misclassification, hours worked, pay discrepancies, adequacy of meal and rest periods, and eligibility for liquidated damages. You may be eligible to receive back wages and other benefits that were denied to you due to your misclassification.

FAQs

What If I Am Wrongly Classified as an Independent Contractor?

If you are wrongly classified as an independent contractor, it is in your interest to hire an attorney to correct that misclassification. You could be missing out on important employee benefits that you are entitled to, most importantly overtime.

Your attorney may be obligated to retroactively contribute to your employee taxes, healthcare, and other benefits. You can protect your rights in this situation by hiring an employment law attorney who can fight to have your money repaid for your loss.

What Are Some of the Most Common California Misclassification Penalties?

California’s Employment Development Department may investigate and penalize your employer if they intentionally misclassified you as an independent contractor. The IRS also has procedures for investigating wrongful classifications. If any investigation finds that your attorney intentionally misclassified you, your employer could face fines and orders to compensate you for your lost benefits.  As well as unpaid wages like overtime.

What Is the Most Common Sign Your Employment Status Is Misclassified?

If you work 40 hours a week and your boss dictates how and when you work, you may be wrongly classified as an independent worker. One of the most important characteristics of an independent contractor is that they have the freedom to perform their jobs how they want, within reasonable limits.

If your boss tells you how you have to complete your tasks, you may be working in an employment capacity and not as an independent contractor.

Why Would Someone Be Misclassified as an Independent Contractor?

In some cases, an employer may wish to lower the cost of hiring employees by misclassifying workers as independent contractors. Although this would violate tax laws and employment laws in many states, some employers may think the risk is worth the financial savings.

In other cases, the employer may have made the misclassification as an honest mistake. Either way, the employer has an obligation to classify their employees correctly.

Schedule Your Employment Law Consultation Today

If you have been classified as an independent contractor but believe you are actually a full-time employee, you could be missing out on important benefits. Employees have rights to health benefits, paid time off, and other benefits that are not typically enjoyed by independent contractors.

An employment law attorney can look at your work situation and determine whether you are missing out on important benefits. You may be entitled to retroactive benefits if they were unlawfully kept from you. The attorneys at Shirazi Law Firm, PC, have helped many workers correct workplace misclassifications. To schedule your consultation, contact our office today.