No, an employer in California cannot simply go ahead and change a worker’s status from “employee” to “independent contractor” unless they meet certain conditions that are set forth by California labor laws. In addition, employers cannot force a worker to enter into a contract as an independent contractor as a condition of employment.
There are numerous characteristics that differentiate a taxable employee from an independent contractor. Recognizing the difference between the two is essential for workers, who are often misclassified as independent contractors. This change in status carries significant ramifications for your finances, and those who have experienced a chance in status are likely to have the following questions on their mind:
- Can my employer hire me as an employee, then switch me to an independent contractor?
- Can my workplace fire me and then re-hire me as an independent contractor?
- What are my rights under California law? Are they breaking the rules under federal laws?
- Do I have a case against them for making me an independent contractor? Can I sue if they refuse to change back my status or fire me?
There are a variety of characteristics differentiating an independent contractor from a taxable employee. It’s important to recognize the difference between the two. Employee misclassification carries severe financial ramifications for workers and their families.
If you believe that you are a victim of employee misclassification, legal advice is the first and most crucial step. An employment lawyer can evaluate your situation and help you take the necessary steps to rectify the problem. Our law firm is here 24/7, and we are happy to offer you a free consultation if your employee status has been changed illegally by your employer.
What Does it Mean to be an Independent Contractor?
A worker who is defined as an independent contractor is generally free from the control and direction of their employer. That means they are engaged in an independently established occupation, profession, trade, or business. You see this arrangement with many types of workers, including rideshare drivers and content creators on platforms like YouTube. Some independent contractors have subcontractors that perform certain job / business-related tasks, and they may have multiple streams of income from multiple employers.
The Importance of Your Tax Status
Tax consequences are one of the most important aspects of whether you are classified as an employee or independent contractor. Workers fall into one of two categories when it comes to tax status: W-2 and 1099.
If you are a 1099 status worker, that means you are working for your employer as an independent contractor. As a result, you do not have federal and state taxes deducted from your paycheck. Thus, you will need to pay for taxes on an annual or quarterly basis. Independent contractors are also exempt from paid job benefits like healthcare and workers’ compensation.
On the other hand, those who are classified as W-2 workers, i.e., employees, have payments for taxes deducted from each and every paycheck. As an employee, you are also eligible to receive benefits like Paid Time Off (PTO), health insurance, and retirement benefits.
How can I Tell if I am an Independent Contractor or Employee?
Are you having trouble figuring out whether you should be classified as an employee or an independent contractor? The following criteria can help you decide which category you belong to:
An employee is someone who is:
- Paid a salary or an hourly rate
- Has a W-2 tax status
- Usually works for one employer
- Has a continuing, consistent relationship with the employer
- Has no ownership in the business they work for
- Is controlled by the employer in terms of their job duties and hours
- Uses tools, equipment, and other resources that are paid for by the employer
An independent contractor is identified by the following characteristics:
- Has a 1099 tax status
- Has control over the work they do and how it is performed
- Operates as their own business
- May have multiple clients / sources of income
- Relationship with the employer may be off and on / temporary
- Uses their own equipment / tools
- Payment is typically issued upon completion of the job / assignment
Do They have a Right to Change My Status from an Employee to an Independent Contractor?
Typically, any change to an employee’s tax status is illegal, like switching them from an employee to an independent contractor. But many employers get away with it, as workers in this situation are unaware of their rights. Employers normally don’t tell you about their plans, and as a result, most workers don’t find out until they see the changes in their paycheck. For example, you see that no taxes were taken out of your check, which is a red flag that your employer has changed you from a 1099 worker.
Is it Illegal to Classify Hourly Employees as 1099 Workers?
Yes, it is illegal to classify an hourly employee as an independent contractor, meaning they receive a 1099 tax form instead of a W-2. This is a form of tax evasion, which is illegal according to U.S. Department of Labor laws. Employee misclassification has numerous consequences for the employer, including payments to the affected employees, a stop-work order from the federal government, and possibly jail time.
Do I have a Claim?
The answer to this question depends on the details of your case, which we can go over with you during a free, private consultation. It’s important that you confirm your suspicions with an attorney right away and not let your employer get away with robbing you of what you rightfully deserve. There is no need to remain a victim when you have our legal experts by your side.
Póngase en contacto con nuestra firma de abogados
California has strong and comprehensive laws in place to protect workers from misclassification. But taking advantage of the legal system and getting the payments you deserve is a challenging process. While it’s in your best interest to hire an employment lawyer, you may have concerns about the associated costs.
California Labor Law Employment Attorneys Group is a contingency law firm, so you do not pay out of pocket to have us represent you in a claim for employee misclassification. Your legal fees are covered by your employer once we secure a settlement or jury verdict on your behalf. If we fail to bring about a successful resolution, you pay us nothing, as you are protected by the Zero Fee Guarantee from day one.
For more information on your right and legal options, please take a moment to contact our office.
