Many of the requirements that apply to compensating employees do not extend to independent contractors. For that reason, employers often attempt to misclassify workers as independent contractors when they are actually acting as bona fide employees. This is an ongoing issue affecting workers in California as the cost of labor and standards of living continue to rise.
Many companies attempt to sidestep California employee labor laws by hiring workers as “independent contractors” rather than as employees. Independent contractors are not considered “employees” under wage and hour laws and do not require overtime payment. If you have been designated as an independent contractor and believe this to be a misclassification, it is important to consult with an experienced employment attorney to determine your accurate employment status.
At David Yeremian & Associates, Inc., a Glendale, California, employment law firm focusing on wage and hour issues, we advocate aggressively on behalf of workers who are misclassified as independent contractors, helping them enforce their rights and collect the compensation they deserve for their work.
What is the Difference Between Employees and Independent Contractors?
From an employer’s point of view, classifying workers as independent contractors can be incredibly cost-effective. When a worker is an independent contractor, the employer does not have to:
- Pay payroll taxes
- Pay overtime
- Reimburse workers for business expenses
- Cover them under workers’ compensation insurance, disability insurance, unemployment insurance or social security
There is a rebuttable presumption in California that a worker is an employee. Actual determination of how a worker should be classified is dependent on a number of factors that make up an “economic realities” test. This test is designed to determine whether the worker is dependent on the company for whom they render their services. The most significant factor in this test is whether the employer has control over the worker as to how the work is done and the manner in which it is performed. Additional factors include:
- The degree to which the worker’s opportunity for profit or loss depends upon the worker’s managerial skill;
- Whether the worker is engaged in an occupation distinct from the employer;
- Whether the work is part of the regular business of the employer;
- Whether the service performed requires a particular set of special skills;
- Whether the employer supplies and personally invests in equipment, labor, tools or materials required for the job to be performed;
- Whether the worker was paid by time or by the job;
- The length of service and permanence of the working relationship. I.e., could this be considered a temporary hiring to perform a specific job or is this a more permanent role
How is Each Independent Contractor Case Evaluated?
Each case involving a potential misclassification of employment status requires a thorough evaluation into the nature and weight of each factor listed above. The courts apply a “totality of circumstances” approach in evaluating the importance and weight given to each factor; however, the right to control the means and manner of the work performed is usually considered the most important factor.
Generally, misclassification claims stem from a worker who is not receiving overtime pay for their work performed. It is important to remember that, if a worker’s job is indeed classified as an independent contractor, they are not entitled to overtime pay under California law.
At David Yeremian & Associates, Inc., we fight for workers who are misclassified as independent contractors. Our top priority is ensuring that our clients are fairly compensated for their work, and we go above and beyond to help our clients recover the payments that have been denied to them.
What is Salary Misclassification?
Not all employees earn overtime for working more than eight hours in a day or 40 hours in a week. Many jobs are covered by the Fair Labor Standards Act (FLSA) which protects employees and their overtime pay rights. The FLSA determines which jobs are to be considered “exempt” from overtime wage laws. These jobs are typically classified as professional, executive, or managerial and are not entitled to overtime pay.
Under both the FLSA and California labor laws, non-exempt employees should be paid at least 1 and 1/2 times their hourly rate for any overtime hours worked. This is applicable where an employee works in excess of 40 hours per week or 8 hours per day. Unfortunately, employers can allow greed or ignorance to interfere, preventing workers from recovering accurate compensation. Additionally, employers may deliberately or inadvertently misclassify non-exempt employees as “exempt” in order to circumvent overtime laws. Typically, exempt employees are those who are paid a salary rather than an hourly rate, and employers are not required to pay them overtime, unless their employment contract states otherwise.
At David Yeremian & Associates, Inc., a Glendale, California, employment law firm focusing on wage and hour issues, we are committed to protecting the rights of clients who have been misclassified as exempt. These workers can end up working significantly more hours than their job requires without being fairly compensated at the overtime rate they deserve.
What are Exempt Employees?
Often, employers attempt to classify workers in a way that allows them to save money. In order to make employees appear to be exempt from overtime payment, employers may give them titles that imply they have exempt status when their job descriptions do not fit that title.
In order to qualify as an exempt worker under California law, an employee must be in an administrative, executive or professional role. In most cases, these classifications require that an employee must:
- Supervise other employees
- Exercise discretion and independent judgment in performing duties
- Perform at least 50 percent managerial duties
What are Nonexempt Employees?
Unless you fall into an exempted class, federal law demands that you be paid overtime of at least 1 and 1/2 times your regular hourly rate for any work performed in excess of 40 hours per week or 8 hours per day. Non-exempt employees cannot be forced to work beyond these hours without proper compensation. Furthermore, overtime hours cannot be exchanged for additional personal or vacation days, sick days, or any other benefits.
If you believe that you are a non-exempt employee and are not being properly compensated for overtime work as required by law, it is important to you consult with an experienced and knowledgeable employment law attorney who can evaluate any potential claims against your employer. The following are a list of factors that may help you determine whether you are not being properly compensated for overtime work:
- An employer is requesting or requiring “off the clock” work;
- Overtime work is paid at the normal hourly rate;
- Inaccurate or lack of adequate time records tracking the hours worked each day;
- Alterations made to time sheets, or time sheets that do not reflect actual overtime worked;
- Lunch breaks are automatically “clocked out” by the employer, rather than manually by the employee;
- Overtime was worked but the pay is denied because the work was not “approved” by a manager or supervisor ahead of time;
- Being given the title of “manager” or “supervisor” but still performing the same job duties as other subordinate, non-exempt employees;
- Requiring to begin work “off the clock” prior to the regularly scheduled “clock in” time;
- Making up for overtime hours in the form of “commission wages” or in exchange for benefits, such as, additional personal or vacation days;
- Denial of federal and state mandated meal breaks;
- Being misclassified as an “independent contractor” despite meeting the critical factors in the Economic Relations Test;
- Being paid less than the minimum wage;
- For jobs requiring travel from and to certain job sites, failure to factor the hours spent commuting between those locations;
- Only being paid a salary. A flat salary agreement does not necessarily mean that a person qualifies as an exempt employee. This is a common method employers use to circumvent overtime wage laws;
Federal law protects non-exempt employees and requires that their employers compensate for any overtime worked. Employers are prohibited from knowingly and willfully refusing to pay overtime and allow for penalties to be imposed for violations. If an employer is found to have violated these laws, the employee may be entitled to recover two (2) times their overtime pay and any attorney’s fees. California law also allows for an employee to recover a penalty of 2 percent of the back-pay of unpaid overtime.
At David Yeremian & Associates, Inc., we are diligent and thorough, crafting strong cases that protect our clients’ rights. Our lawyers are skilled negotiators and litigators who level the playing field and give clients the support they need to stand up to their employers and demand just compensation.