Different agencies – IRS, EDD, DLSE and Court use different employee v independent contractor tests for determining whether a particular worker is an employee or an independent contractor. No single factor will determine that status. Generally, however, the most important factor is the extent to which the employer controls and directs the manner in which the worker performs his job.
The Basic Employee v Independent Contractor Test
The key California Supreme Court that discusses the distinction between employees and independent contractors is S.G. Borello & Sons, Inc., v Dept. if Industrial (1989). In that case, the Court held that the primary factor in determining employee / independent contractor status is “whether the person to whom service is rendered has the right to control the manner an means of accomplishing the results desired.” There is also a number of secondary factors, including the ability to control rates, schedule, whether a worker in question operates a distinct business, and how he is paid.
In a number of recent cases brought by truck drivers against their employers, the courts held that those drivers were employees and not contractors, because the company controlled the drivers’ rates, routes, schedules and paid them a flat rate per stop. Those drivers did not operate their own business. The companies in question supervised those drivers and had a discretion to deny their requests for days off. And of course, the fact that most companies provide trucks to drivers makes it even more certain that those drivers are employees. The fact alone that some of those drivers signed an independent contractor agreement does not change their status, as that’s just one, not so significant factor in employee-contractor determination. This type of agreement is especially not very significant if it is also stated that the company can stop providing work to a driver for any reason or no reason with or without notice, which makes the whole thing look all the more like at-will employment rather than a contractor relationship.
What to Do If you Were Misclassified as an Independent Contractor
If you have been misclassified, you have to make a very personal decision that doesn’t only depend on the law but also on the practical aspects of your employment. The first questions you should ask yourself is the potential benefit of bringing this issue to your employer’s attention or filing a claim. Is there a potential for a large recovery of unpaid overtime? If not, and if your misclassification is just a technical violation, you need to ask yourself whether it’s worth dealing with at all.
If you are owed overtime and other wages as a result of being potentially misclassified, then you should first approach your employer and inquire about this and then, if that doesn’t resolve the issue, file a claim with either DLSE (Department of Labor and Standards Enforcement) or a Superior Court, depending on the amount in dispute, and the exact nature of your claims.
There is always a significant risk of retaliation for those employee who bring a claim for misclassification and unpaid overtime while still being employed with the same employer. This is yet another question that you should ask yourself – how likely is your employer to retaliate, and can you afford the risk of losing a job. Even though retaliation for protesting wage and labor code violations is illegal, employers still can and often do choose to retaliate and deal with the legal consequences later.