In California, since different laws may be involved in a particular employment situation, it is possible that the same individual may be considered an employee for purposes of one law and an independent contractor under another law.
Not all workers are employees as they may be volunteers or independent contractors.
Employers sometimes improperly classify their workers as independent contractors so that the employers are not liable for payments under disability insurance, unemployment insurance, or social security. And, treating a worker as an independent contractor means the employer does not have to pay payroll taxes, the minimum wage or overtime. Finally, not treating workers as employees means the employer does not comply with other wage and hour law requirements and does not have to cover independent contractors under workers’ compensation insurance.
The state agencies most involved with the determination of independent contractor status are the Employment Development Department (EDD), which is concerned with employment-related taxes, and the Division of Labor Standards Enforcement (DLSE), which is concerned with whether the wage, hour and workers’ compensation insurance laws apply. There are other agencies, such as the Franchise Tax Board (FTB), Division of Workers’ Compensation (DWC), and the Contractors State Licensing Board (CSLB), that also have regulations or requirements concerning independent contractors.
Here are some good questions to help you decide what to do about your status as a worker. The answers to these questions can be found by clicking here.
1. How do I know if I am an employee or an independent contractor?
2. The person I work for tells me that I am an independent contractor and not an employee. He does not make any payroll deductions or withholdings for taxes, social security, etc., when he pays me, and at the end of the year he provides me with an IRS form 1099 rather than a W-2. By paying me in this manner does it mean I am automatically an independent contractor?
3. Does it make any difference if I am an employee rather than an independent contractor?
4. When I started my current job my employer had me sign an agreement stating that I am an independent contractor and not an employee. Does this mean I am an independent contractor?
5. How can it be that the Labor Commissioner determined I was an employee with respect to a wage claim I filed and won, and the Employment Development Department (EDD) determined I was an independent contractor, and denied my claim for unemployment insurance benefits?
6. As an employer, what obligations do I have to purchase Workers’ Compensation Insurance or comply with other labor laws for persons classified as independent contractors?
7. What can I do if I believe my employer has misclassified me as an independent contractor and as a result am not being paid any overtime?
8. What is the procedure that is followed after I file a wage claim?
9. What can I do if I prevail at the hearing and the employer doesn’t pay or appeal the Order, Decision, or Award?
10. What can I do if my employer retaliates against me because I thought I was misclassified as an independent contractor and objected to not being paid overtime?