The experienced and award-winning San Diego based employment law attorneys at Gehres Law Group, P.C. provide assistance to employers in correctly classifying workers. Misclassification can have serious financial and legal consequences for businesses who are not in compliance with applicable labor laws and tax regulations. Employees may also require legal assistance to determine if they have been correctly classified and are receiving all appropriate workplace benefits and protections.
What Does Employee Misclassification Mean?
Employee misclassification occurs when an employee is not correctly classified under applicable labor laws. There are several types of misclassification, with two primary types including the misclassification of an employee as an independent contractor and the misclassification of a worker as exempt when the worker should be entitled to receive overtime.
While some misclassification is inadvertent, employers may intentionally misclassify workers in an attempt to reduce their costs of labor. Employers misclassify employees as independent contractors to avoid costs associated with hiring an employee, including unemployment insurance, workers’ compensation insurance, and an employer’s responsibility to pay half of an employees FICA taxes. Independent contractors are also not entitled to many labor law protections, including family and medical leave and even minimum wage protections.
Employers misclassify employees as exempt from overtime to avoid paying the wage premium (time-and-a-half or double time depending upon hours worked) for hours over eight per day or 40 per week.
The Department of Labor describes the misclassification of employees as independent contractors as “one of the most serious problems facing affected workers, employers and the entire economy.
There are a number of different factors which determine the correct classification for an employee versus an independent contractor. However, the Employment Development Department of the State of California indicates the basic test focuses on the level of control the worker has to determine the “manner and means by which the work is performed.” If a worker controls when, where, and how work is performed, then the worker is more likely to be properly classified as an independent contractor. If an employer has a substantial degree of control over various aspects of work performance, the worker should typically be classified as an employee. Click here for additional factors in determining whether a worker may be classified as an independent contractor.
Even when workers are correctly classified as employees, they still face financial loss if they are improperl misclassified as exempt from overtime rules. The California Department of Industrial Relations explains the types of workers who could be considered exempt from overtime rules.
Exempt workers can include executive, administrative and professional employees; employees in computer software; members of national service programs such as AmeriCorps, and outside sales persons, among others. There are specific requirements for a worker who is within these particular fields to be exempt from overtime protections. Click here for a discussion on California exemptions from overtime.
Getting Help from a San Diego Employment Lawyer
The San Diego employment lawyers at Gehres Law Group, P.C. provide representation to employers who are making classification decisions concerning staff members and who have been accused of misclassifying their workers. Our legal team can also provide representation to workers who have been deprived of important employee benefits resulting from misclassification. Give us a call at 858-964-2314 or contact us online to find out more about this important legal issue and how we can help.