The classification of workers holds significant implications for employers and employees alike. The distinction between an independent contractor (or “gig” worker) and an employee impacts important issues including legal protections, compensation, benefits, and taxation. In order to understand your rights in the workplace and ensure that you are not being misclassified, it is important to understand the distinctions between employee and independent contractor status.
Independent Contractor v. Employees in California
Independent contractors, or “gig” workers, typically operate as self-employed individuals who provide specific services on a contract or project basis. As such, contract workers retain significant control over what work they perform, how they carry out their work, where they perform their work, and what their work schedule will be. Independent contractors are generally responsible for providing their own tools and resources, paying their own taxes, and securing their own benefits such as insurance independently. Contract employees are not protected by labors laws that guarantee a minimum wage, overtime, workers compensation, and other protections in the workplace.
Alternatively, employees work under the direct control and supervision of their employer. Employers control what tasks their employees perform, how they perform their work, and where and when they perform their work. Employees are entitled to legal protections such as minimum wage, overtime pay, workers compensation, and other benefits as mandated by law. Employees may be entitled to benefits provided by their employer such as healthcare and retirement.
Who is Considered an Independent Contractor in California?
The gig economy has grown in recent years, driven by companies such as Uber, Lyft, DoorDash, and Postmates, who have been hiring independent contractors in large numbers. California has responded to the increasing number of gig workers by updating the rules and regulations that govern independent contractor status.
Dynamix and Assembly Bill 5
In 2018, the California Supreme Court issued a critical verdict in Dynamex Operations West, Inc. v. Superior Court of Los Angeles which altered the classification of workers as independent contractors. In Dynamex the court discarded the previously relied upon Borello test in favor of a more employee-friendly standard now known as the ABC test. The court ruling triggered the passage of Assembly Bill 5 (AB 5) in 2019 which codified the ABC test into California state law.
The ABC Test
Under the ABC test, workers are presumed to be employees unless their employment meets all three specific criteria, A, B, and C:
- The worker is free from the control and direction of the hiring entity in performing their work, both under the contract and in practice.
- The Worker performs work that calls outside the usual course of the hiring entities business.
- The worker is customarily engaged in an independently established trade, occupation, or business or the same nature as the work they perform.
The ABC test raises the bar for classifying workers as independent contractors, making it more challenging for businesses to classify workers as such. Dynamex and AB5 have had far-reaching effects. Businesses have had to reevaluate their workforce to ensure that they are complying with state law, while workers have been granted the possibility of the labor protections and benefits that come with employee status.
Misclassification:
Employers may misclassify their employees as independent contractors; misclassification may be unintentional, or it may be done intentionally in order to save the employer money. Regardless of intent, misclassification is illegal, and you may be owed lost wages, overtime, benefits, and reimbursements.
What to do if you believe you may be misclassified?
You work hard to earn a living, and you have the right to be fairly and fully compensated for any work you perform.
If you are or have experienced misclassification, you may be entitled to damages in the form of back pay and punitive damages. Take the following steps to support your case:
Save Evidence:
Record all relevant events or interactions in writing. Keep a log of the hours that you work, tasks you perform, the supervision and direction that you receive. Save related paychecks, emails, notes, and documents.
Report the Discrimination:
Report the misclassification directly to your employer. If your employer does not correct their behavior, you may file a complaint with the California Labor Commissioner.
Find an Attorney:
Reach out to an employment attorney. Avloni Law is a law firm dedicated to fighting for your rights in the workplace. Click here schedule a free consultation. We represent clients across California, with offices in Los Angeles, San Jose, and San Francisco.
