Two Main Types of Missclassification
Employers often misclassify their workers in order to save the company money and because they do not take the time to properly determine how their workers should legally be classified. When companies misclassify their workforce, the result is usually undercompensation of the employees, and unlawful monetary gain to the company. There are two ways in which California employers most commonly misclassify their workers in order to save money.
1) Misclassifying Employees as Contractors or Subcontractors
On April 30, 2018, the California Supreme Court published its decision in Dynamex Operations West, Inc. v. Superior Court, a decision that replaced the flexibility that companies previously enjoyed in determining whether their workers were contractors or employees, with a much more employee-friendly test that presumes all workers are employees unless the company proves otherwise. So, in California, if the company you work for wants to save money by claiming that you and your co-workers are “contractors” instead of “employees” the company must now prove all of the following:
- (A) The worker is free, in everyday tasks, from the hirer’s control and direction;
- (B) The work performed is outside the usual course of the hiring entity’s business; and
- (C) The worker is customarily engaged in an independent occupation or business of the same type as the work he or she is performing for the hiring entity.
If the company fails to prove even one of the above factors for its workers, those workers are employees, thus entitled to the various State-mandated employee benefits under California law (such as overtime pay, double time pay, meal periods, rest period, workers compensation insurance benefits, expense reimbursements, minimum wage, and minimum vacation time, etc.)
Importantly, if you work as a contractor for mainly one or two companies and you perform the main service that those companies provide to the end customer, then you may have very likely been misclassified as a “contractor” or “subcontractor” instead of an “employee” who is entitled to the California-mandated employee benefits. If you suspect that the company you work for might have misclassified you as a contractor instead of an employee, CONTACT US today for a free and confidential consultation. Industries that appear to violate the law by misclassifying their workers as contractors more frequently than others include:
2) Misclassifying Hourly (Non-Exempt) Workers as Salary (Exempt) Workers
Even when companies get it right by properly classifying their workforce as “employees” they can sometimes try to unlawfully save money by misclassifying their employees as “exempt” from overtime, meal periods, rest breaks, etc. In other words, they deny employees State-mandated benefits by classifying the employees as “exempt” or salary employees instead of “non-exempt” or hourly employees. This typically permits the employer to (unlawfully) require the hourly (non-exempt) employee to work long hours without any overtime pay and without any meal or rest breaks, even though the law requires it.
It is the employer’s burden to prove that you are an exempt employee who is not entitled to overtime pay, meals, breaks, and a host of other protections. If you believe the type of work you do should probably pay you for the overtime you work and permit you meal and rest breaks during your shift, please CONTACT US today for a free and confidential consultation so we can determine whether you have been misclassified by your employer.