When working in the state of California, you are either an independent contractor or an employee. Employees and independent contractors are two different classifications under labor and employment laws. There are several differences between them and while that classification may seem like a minor detail, it is crucial to be aware of it so you are not misclassified.
Being misclassified can result in improper pay, missed benefits, tax implications, and unpaid overtime that is earned.
There are several specific details that differentiate an employee from an independent contractor. This differentiation is more than just a title, and it is crucial to keep in mind as it can have a profound impact on your finances and rights.
An employee is someone who:
- is paid a regular wage
- has taxes withheld from their wages
- receives employee benefits
- an employer dictates their work schedule
An independent contractor is someone who:
- is paid for projects
- manages their taxes
- manages their scheduling
- is considered by the IRS to be self-employed
Although the details that differentiate an employee and an independent contractor seem clear and apparent, why do employers misclassify?
Sometimes misclassification is a simple error in paperwork or processing. However, unfortunately, it is often intentional. For example, misclassifying an employee as an independent contractor means the employer pays fewer taxes and benefits. The employer can also avoid paying overtime.
After reviewing the distinctions between an employee and an independent contractor, have you been misclassified? If you suspect that you have been misclassified, or you know you have lost pay or benefit, do not delay getting help. The statute of limitations for most California wage and hour lawsuits is three years from the date when the most recent violation has occurred.
Here at Aiman-Smith & Marcy, we have helped many clients in California that have been misclassified by the person they are doing work for. If you are worried you have been misclassified, allow our attorneys to review your situation and ensure you are receiving the benefits and compensation you deserve.