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Are you an Independent Contractor or are you an Employee?

September 24, 2013

You're an employee.

Well, probably, anyway.

Without knowing too much about what you do, I can say with some confidence that you're probably an employee. That's because California assumes that when you do work for someone else, you're an employee until proven otherwise.

There are a lot of rights that come with being a California employee. As an employee, you have a right to be paid on time. You have a right to a paystub that tells you how many hours you worked, how much has been deducted for your taxes, and what the actual name of your employer is (they use fictitious names sometimes, and you may not even know what the company's real name is). 

You don't have any rights as an independent contractor except what's in the contract. Sometimes, you may not even have a written contract, so your contractual rights aren't even clear.

As an employee, your employer is required by law to pay workers compensation insurance, unemployment insurance, payroll taxes, and a host of other stuff.  As an independent contractor, the company doesn't have to pay any of those things.

Guess which one the company would rather say you are?

Fortunately, California doesn't really care much whether the company says you're an independent contractor or an employee. It's one factor, but it's an itty-bitty factor among much larger ones. The most important factor is control: who controls your work hours? your assignments? your work location? The more and more control the company exercises over your work day, the more and more you look like an employee and not an independent contractor.

Some companies misclassify workers as independent contractors, not because they're evil, but because they don't know any better and want to get the advantages of having independent contractors. Okay, some of them are evil. I hope you don't work for one of the evil ones.

Unfortunately for them, California has enacted stiff penalties for misclassifying employees as independent contractors. There are even more penalties for failing to issue proper paystubs, which many companies do when they misclassify employees.

If you believe that you've been misclassified as an independent contractor, and you think you're really an employee, there are some options available to you:

1. You can contact the California Employment Development Department (EDD), and ask for an audit. They will review your position, and let your employer know whether you are an independent contractor or (more likely) an employee.

2. You can tell your employer that you think you're an employee, and ask the employer to make it right.

Or, my preferred option:

3. You can wait until you find another job, and *then* bring it up to the employer. Look, it would be illegal for your employer to retaliate against you for bringing any of this up, but if employers didn't do illegal things all the time, I'd be out of business, and I'm plenty busy. And I'll bet that in this economy, you'd probably rather have a job than a lawsuit.

If you think that you've been misclassified, consider waiting until you're safely in a new job, and then decide if you want to pursue it by bringing it up to your employer or seeing an employment attorney who knows how to handle these cases. Who knows? By then, you may be happily employed by a conscientious, law-abiding company, and be ready to put the old company behind you.

Either way, you can make an informed choice about how to proceed when you know the difference between an independent contractor and an employee.

 

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