Misclassified independent contractors may be losing thousands
Companies that misclassify workers as independent contractors save money by taking it out of their employees’ pockets.
In recent months, a number of high-profile legal disputes involving Uber, the popular ride-sharing company, have put the national spotlight the topic employee misclassification. Many of the recent Uber disputes have focused on disagreements between the company and its drivers regarding how those drivers should be classified; the company says they are self-employed independent contractors, while the drivers themselves say they are company employees.
What many people following this controversy may not be aware is that the issue of misclassification is potentially relevant not just for Uber drivers, but also for anyone working as an independent contractor in any industry.
At both the federal level and at the state level in California, there are many different laws that exist to protect workers. This includes laws regarding:
- Minimum wage and overtime
- Workers’ compensation
- Maternity leave
- Family medical leave
These laws and many others like them exist to protect the legal and financial interests of workers and their families, and to help minimize the risk of exploitation at work.
Unfortunately for workers who are incorrectly classified as independent contractors, these laws apply only to employees. Although sometimes it is correct and appropriate for a worker to be classified as an independent contractor, this is only the case in certain situations. Too often, companies misclassify workers on purpose in order to save money on payroll taxes, employee benefits and other expenses. However, it is the misclassified workers themselves – and their families – who end up paying the price.
California wage and overtime laws are stronger than many others
Because California sets its own minimum wage and overtime requirements, which are more generous than those required by federal law, misclassified independent contractors in California are at a particular disadvantage compared to those in other parts of the country, where the labor laws are not as strong.
A federal law called the Fair Labor Standards Act requires that most workers in the United States must be paid at least $7.25 per hour, and that they must be paid at least 1.5 times their hourly wage for any time worked beyond 40 hours in a single work week.
In California, however, state law sets the bar higher for employers in terms of both minimum wage and overtime requirements. Most workers in California must be paid at least $9 per hour – nearly 25 percent more than the federal minimum wage. Furthermore, California workers are entitled to overtime pay in a wider variety of circumstances than those provided for by federal law, including:
- 1.5 times their hourly wage for time worked beyond eight hours in a single day or 40 hours in a single week
- 1.5 times their hourly wage for any hours worked on the seventh consecutive work day in any week
- Twice their hourly wage for any time worked in excess of 12 hours in a single work day
- Twice their hourly wage for any time in excess of eight hours on the seventh consecutive work day in any week
When workers are misclassified as independent contractors, they are not only deprived of the fair pay to which they are entitled by law, but they may also be deprived of important employer-provided benefits such as medical and dental insurance, retirement benefits, paid vacation and sick time, and many more.
If you have concerns misclassification at your job, or if you believe you have not been paid fairly for the hours you work, contact the employment lawyers at the Navarette Law Firm to discuss your situation.