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Who is an independent contractor in California?

One of the most misunderstood and misused legal concepts in California is the status of "independent contractors." Most employers know that they are not required to pay overtime or minimum wage, provide workers compensation benefits or provide fringe benefits for independent contractors. Many employers try to take advantage of this distinction by simply labeling employees as "independent contractors." Some even have employees sign employment agreements that describe the employee as an independent contractor. However, whether a person is, in fact, an independent contractor or an employee depends not on labels but on a complex test that has been derived from statutes, regulations and court decisions.

The California Supreme Court held in 1989 that, in resolving the employer's liability for unpaid overtime, the question of whether a person is an independent contractor or an employee depends upon a detailed factual analysis of the job duties, whether these duties are performed and the degree of direct supervision exercised by the employer. This test has become known as the "multi-factor" or "economic realities" test. The most significant factors that must be considered are whether the employer has the right to control the manner and means in which the work is performed. If the employer exercises direct control over the hours of work, methods to be used in performing the work and the place where the work is performed, the worker will most likely be considered an employee and not an independent contractor, regardless of the classification or label used by the employer.

Other factors that may be considered include whether the worker provides special skills or tools, the length of time for which services are to be performed and whether the worker provides the place where the services are performed. If the work in question requires a special license to be held by the principal or the worker, a rebuttable presumption is created in favor of finding the relationship to be one of employment and not that of an independent contractor.

Any person who is treated by their employer as an independent contractor may wish to consult a lawyer who specializes in employment law. A knowledgeable attorney can review the circumstances of the job and provide advice on whether the employer is liable for unpaid overtime, fringe benefits and payroll taxes. An experienced attorney can also provide advice on whether a complaint should be filed with one of the government agencies that regulate employee status or whether a lawsuit is the better choice for obtaining relief.

Source: State of California Department of Industrial Relations, "Independent contractor versus employee," accessed on Sept. 5, 2016

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Law Offices of Allan A. Sigel, P.C.

Law Offices of Allan A. Sigel, P.C.
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