L ots of employers try and get around wage and hour law by classifying their workers as independent contractors. This can be a very costly mistake, particularly with California’s new law fining employers $25,000 for intentionally misclassifying their employees as independent contractors. (It also makes them tell the world they have been naughty by publicly posting the fact they were penalized. A little public shaming can go a long way sometimes.)
Qualifying as an independent contractor is difficult. In California, the most significant factor to be considered is whether the employer has the right to control the worker’s final product, and the manner and means in which the work is performed. For example, think of a McDonald’s employee working the cash register versus an artist commissioned to create a sculpture for a park. McDonald’s has very specific things that it needs its cashiers to do on a very specific schedule set by McDonald’s. McDonald’s cashiers have to wear McDonald’s uniforms, sell McDonald’s products, work McDonald’s hours, and even speak to customers the way McDonald’s wants them to. The artist creating the sculpture, however, is commissioned to use his or her creativity and artistic talent to create something unique. The owner of the park has no say in how he or she does it or what the final product looks like (beyond generalities such as requesting a sculpture of a person rather than a duck). The artist can come and go as he or she pleases so long as the work gets done by a specified date within a specified budget.
Of course most situations are not that cut and dry. Additional factors that may be considered depending on the job are:
1. Whether the employee is performing work distinct from the employer.
2. Whether the work is a part of the regular business of the employer.
3. Whether the employer supplies the instrumentalities, tools, and the place to do the work. For example, the McDonald’s cashier uses McDonald’s point of sale device, works at the McDonald’s restaurant, and wears McDonald’s clothes. The artist uses his own tools and might create much of his work at his or her own studio.
4. Whether the worker is invested in the tools and instrumentalities the worker uses for the work;
5. Whether there is a special skill involved in the work;
It is the employer’s burden to prove that you are an independent contractor, and not an employee.
6. Whether the worker shares in the profit or loss depending on the worker’s performance;
7. Whether the work is of a set duration or an indeterminate period of time;
8. Whether the worker is paid per job or by time worked;
9. The intent of the parties.
Although the intent of the parties is relevant, employers often think that if they simply have the employee sign an “independent contractor” agreement, this magically make the employee an independent contractor. Such agreements are not determinative and are given little weight by courts.
We can usually tell if someone is an independent contractor or not very quickly. Sometimes it is a little more complicated. Usually, it is an unscrupulous employer trying to save a couple bucks with an unsuspecting (or uncaring) employee. If you are a so-called “independent contractor,” let us know in the contact us section below.