Employee vs. Independent Contractor – The Difference may Surprise You

Image of woman considering if she is an Employee or an Independent Contractor

Employees who are misclassified as independent contractors can have a substantial claim.

Although it isn’t always easy to determine whether you are an employee or an independent contractor, the distinction can have a major impact on your rights and on whether or not you have a claim against your employer. In California, employees are protected by a number of labor laws that require employers to pay overtime, provide meal and rest breaks, and prevent employers from discriminating against or terminating their employees for improper reasons. (Note: “exempt” employees are not covered by certain wage and hour laws. If you aren’t sure whether you are an exempt employee, see this article about exempt vs. non-exempt employees.)

Employers may be Tempted to Misclassify Employees as Independent Contractors

Many employers in California are tempted to classify their workers as independent contractors, even if they are actually employees. The company can cut costs by not paying certain benefits such as medical insurance and avoiding tax and Social Security contributions. Moreover, independent contractors receive less protection under labor laws, reducing the company’s risk of potential discrimination claims, wrongful termination actions, and liability for workplace injuries. Finally, the company can avoid paying its employees overtime and providing meal and rest breaks.

Know Your Rights – You May Have a Claim!

As a non-exempt employee, you have a number of important rights, including:

  • Overtime pay for every hour beyond an 8 hour shift (learn more about unpaid overtime)
  • A 30 minute, uninterrupted meal break every 5 hours
  • A 10 minute rest period every 4 hours (learn more about meal and rest break violations)
  • Protection from discrimination or termination (firing) based on your disability, age, race, gender, sexual orientation, pregnancy, or for taking family or medical leave (learn more about wrongful termination)

If you think that you have been misclassified as an independent contractor when you should be classified as an employee, your employer may owe you a substantial amount of money.

How do I know Whether I am an Employee or Independent Contractor?

The most general rule is that if the employer controls how your work is done, you may be an employee. If the employer only controls the results of your work, you may be an independent contractor. A simple example helps to clarify the distinction.

  • Independent Contractor – Ian is a landscaper. Every Thursday, Ian does landscaping work for Wendy. Wendy asks Ian to mow the lawn, trim the hedges, and spread fertilizer. Ian uses his own tools, he doesn’t have to wear a uniform, and Wendy pays him a flat rate of $150 every Thursday. In this case, Ian is an independent contractor. Wendy tells Ian what she wants done, but she can’t tell Jeff which tools to use, what clothes to wear, etc.
  • Employee – Edward is also a landscaper. Edward works for Jeff for four days a week.  When Edward goes to work, he wears a uniform that Jeff gave him, he uses Jeff’s tools, and Jeff pays Edward by the hour.  In this case, Edward is probably an employee. Jeff gets to control how Edward does his work, by making him wear a uniform, making him use certain tools, and deciding which clients Edward will work for.

There are a number of other factors that may suggest that you are an employee, and NOT an independent contractor.

  • You don’t own your own tools or equipment
  • You only have one job
  • Your job doesn’t require special skills
  • Your work is an integral part of your employer’s business
  • You have been working for your employer for a long time
  • You get paid by the hour
  • You do the same kind of work as your employer

You May be an Employee Even if Your Employer Says that You are an Independent Contractor.

Even if your contract says that you are an independent contractor or your employer tells you that, you may actually be an employee. Whether or not you are an employee is a legal question, and your employer cannot decide this simply by putting it in a contract or telling it to you.

Get Help from an Employment Attorney (Labor Lawyer)

It isn’t always easy to know whether you are an employee or independent contractor.  A labor lawyer (also known as an employment attorney or employment rights attorney) can help you to determine whether or not you are an employee.  If you are an employee, your employer may owe you money and you may have a substantial claim.  Fortunately, talking to a lawyer doesn’t have to cost you.  We offer free consultations to help you to determine your rights and whether or not you have a claim. To speak with one of our employment lawyers today, call (760)-239-0230, or leave us a message here and we will contact you as soon as possible. Don’t let another day go by without knowing your rights.

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David Peer

About the author

David focuses his practice on civil litigation for small businesses and individuals. Prior to founding Peer & Hart, PC, David worked in WilmerHale's Los Angeles office litigating complex matters for multi-national corporations. David was a member of WilmerHale's patent litigation group and was on the trial team for large-scale patent cases in Federal Court. In 2015, David helped try a multi-week, billion dollar patent case. David also took part in government investigations and major discovery projects, giving him a deep understanding of efficiency and cost-reduction strategies in pre-trial litigation.

Since forming Peer | Hart, David has defended his clients from employment suits and actions in front of administrative agencies. David has negotiated favorable settlements and counseled his clients on cost effective litigation strategy and litigation prevention. David has an engineering degree and is registered to prosecute patents in front of the US Patent and Trademark Office.

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