The misclassification of employees is a growing problem all over the United States as companies choose to utilize the services of independent contractors in place of hiring employees. Sourcing out certain work can save a lot of money for companies in terms of payroll taxes, minimum wages, overtime wages, and other costs that are legally required of employers, such as workers' compensation or disability.
For this reason, employees are increasingly being labeled "independent contractors" so that the employer does not have to pay out on such benefits. In 2014, the Wage and Hour Division of the Department of Labor performed investigations that resulted in almost $80 million in back wages for mislabeled employees.
So what makes an independent contractor different from an employee? There are some questions that you can ask yourself if you are unsure of the nature of the relationship between your employer and yourself. Ask yourself a few things.
- Are you an economically independent individual in business for yourself, or are you economically dependent on the company to which you provide services?
- Are you a permanent employee?
- Are you independently responsible for the service you provide or are you under direct supervision throughout the process?
- Are you paid upon completion of a project or are you paid based on the amount of time that you work?
The California Department of Industrial Relations states that there is no set definition for the term "independent contractor." In order to reach a conclusion, a legal professional must look to the interpretations that have been set forth by the courts and enforcing agencies in similar situations.
This information is not meant to be viewed as legal advice. If you feel that you may have been mislabeled by your employer and wish to determine what course of action may be available to you, only a qualified employee rights attorney can assist you in determining what your rights are and what course of action may be available to you.