Independent Contractor Classification
Independent Contractor vs Employee Classification
Many employers misclassify workers as independent contractors rather than employees for an economic benefit derived from not paying payroll taxes, workers compensation and employee benefits.
Determining Employee Status
The primary issue in determining whether an individual is an employee or an independent contractor is control; as explained by an Irvine employment law attorney this means not only the results of the worker’s performance, but also how those results were accomplished.
Internal Revenue Guidelines
The IRS has established three categories to determine a worker’s status:
- Behavioral control
- Financial control
- Relationship of the parties
A threshold issue is the detail of instructions provided. If a worker is told when and where to work, how to do the work and provided detailed training to accomplish the task, it is more likely that worker is an employee.
Independent contractors are more often paid a flat fee for their services, rather than a weekly or monthly salary. Additionally, independent contractors are not typically reimbursed for costs, assume the risk of losing money on a job and can work for other entities.
An important factor an Irvine employment law attorney will explore is the nature of the relationship; an open-ended agreement, indefinite in length with no completion date considered is more indicative of an employer-employee relationship. A contract with terms indicating an individual is an independent contractor is not controlling.
If you have been misclassified as an independent contractor, you may be entitled to the benefits you should have received if you were properly deemed an employee, plus reasonable costs of pursuing your claim.
Penalties for Employers
California has taken strong measures to bring employers in line on this issue. For those employers who willfully misclassify employees as independent contractors, fines range between $5000 and $15,000 per violation and may be as much as $25,000 per violation if a consistent pattern is proved.
Contact an Irvine Employment Law Lawyer for Legal Counsel
If you have any doubt about the proper status of your working relationship, call Altus Law Firm at 949-346-3391.