“Independent contractor” is often a title given to workers that are not given traditional benefits by their employers, such as overtime, meal/rest breaks, health insurance, vacation time, and other benefits.
Courts, however, are now cracking down on employers who abuse the “independent contractor” status simply to avoid labor law requirements. The Oregon Court of Appeals has recently ruled that even an “independent contractor” agreement between an employer and a worker does not necessarily prove that the worker is in fact an independent contractor.
In California, Employers sometimes improperly classify their employees as independent contractors, and avoid paying payroll taxes, the minimum wage or overtime, comply with other wage and hour law requirements such as providing meal periods and rest breaks, or reimburse their workers for business expenses incurred in performing their jobs. Additionally, employers do not have to cover independent contractors under workers’ compensation insurance, and are not liable for payments under unemployment insurance, disability insurance, or social security.
There is no set definition of the term “independent contractor” in California. Rather, the classification of workers as independent contractors or employees ultimately comes down to the degree of control exerted by the employer over the worker—the more control that an employer exerts, the more likely the worker is an employee. In addition to “control,” California Courts consider other factors in determining whether a worker is properly classified as an employee or independent contractor:
1. An employee performs work that comprises the core business of the employer and is not a distinct occupation or business from that of the employer.
2. The employer supplies the instrumentalities, tools and the place for th eemployee. If you work from the employer’s office and make use of the employer’s computers, machinery and infrastructure, then it is more likely the individual is an employee.
3. The employee is not permitted to subcontract or hire employees of their own to complete the work. If the employee is not permitted to outsource work to others or employ helpers, then he/she may not be truly independent and may actually be an employee.
4. The worker performs the same work as employees. If an individual performs the same work as employees and reporting to the same managers as employees, then they are probably also an employee.
5. The individual works at-will, on a full-time basis, for an extended period of time. Independent contractors are typically engaged by employers on a project-basis or for a limited period of time specified by contract. If an employee has been working full-time for months or years without any specified termination date, then he/she may resemble an employee and may be misclassified.
6. The employee is paid the same amount on a regular interval without submitting invoices. Independent contractors typically bid on projects or specify an hourly rate and then submit invoices to the employer. Employees, on the other hand, simply show up to work and are paid for their time on a weekly or bi-weekly basis. If the individual is routinely paid the same amount without having to submit invoices and regardless of the project or work performed, then he/she is more likely an employee.
7. The individual works exclusively for one employer on a full-time basis. Independent businesses typically provide services to multiple customers and clients at any given time. If an individual works exclusively for one employer on a full-time basis, this fact suggests an employment relationship.
The following factors that suggest an employee is an independent contractor:
1. Work is distinct from that of the employer.
2. Individual supplies the materials, tools and place to work.
3. Individual has invested in their own equipment.
4. Individual has employees.
5. Individual’s work requires a special skill or license.
6. Individual’s contract is on a project basis or for a limited time period.
7. Individual has other customers/clients.
8. Individual can increase or decrease profits based on managerial decisions.
Axis Legal Counsel represents clients in numerous kinds of lawsuits and disputes involving some of the nation’s largest employers. Whether it is harassment, discrimination, retaliation, hostile work environment, wage/hour, or other claims, Axis Legal Counsel is experienced in the field of employment and labor law and focused on providing high-quality legal service.
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