Do Employment Laws Apply to Self-Employed Workers in California?

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Do Employment Laws Apply to Self-Employed Workers in California?

Employment laws in California protect workers from unfair treatment. Employees are protected from discrimination and retaliation. They’re entitled to pregnancy accommodations, minimum wage, meal and rest breaks, overtime, and much more. When a company hires you as an independent contractor, do any of California’s employment laws apply to you?

 In many cases, self-employed contractors are not protected by many of California’s employment laws. But, there’s also a chance the company has misclassified you as an independent contractor. Is it possible you meet the criteria designating you as an employee? If so, the company could be fined heavily for violating state labor laws. It’s time to decide if you’re working for a company that has misclassified your role.

 Are You Truly Self-Employed?

 Governor Newsom signed AB 5 into law in 2019. This law helped shape the definition of what an independent contractor truly is. Companies may hire self-employed contractors to fill jobs without paying benefits or employment taxes, but those contractors cannot be managed or told how to complete their job.

 If you’re a self-employed worker in California, check out the ABC test. This three-part test provides guidance on how to decide if you’re really an independent contractor or if you meet the definition of being an employee.

 The ABC test determines if a worker should be considered an employee instead of an independent contractor. You’re self-employed if:

  • You are not directed or controlled by the company, including how you perform the requested work.
  • The work you do is not typical work completed by the company.
  • You work in the same field as the work you’re completing.

For example, suppose you’re a photographer, and a hotel requests your services for a photo shoot. You’re given free rein on how you set up and take the photos. You decide the schedule. Photography is not typically a position you find in a hotel. Plus, you’re a photographer, so you work in the same field as the work you’re asked to do. In that situation, you meet the three rules outlined in the ABC test.

 Compare this to a job posting you see where an independent contractor is asked to find breaking news and write summaries of the information you find for an online newspaper. You must work at their office from 9 a.m. to 4 p.m. using their content management system and style guide. You’re not free of the company’s control as they’re telling you when, where, and how to work. You don’t meet the first two criteria of the ABC test, so you’d be considered an employee.

 If you can’t get an answer from the ABC test, other factors help you decide. Move to the Borello test. This test looks at 11 criteria.

  • Does the employer need to give you notice before ending your contract, or can they terminate you without notice?
  • Do you have complete control over how you do the work?
  • Do you and the employer work in the same field?
  • Is the work you’re doing different from the typical business tasks completed at the company?
  • Does the employer supervise or manage all of the work you do?
  • Does the company provide the software or tools needed for you to complete the work?
  • If you wanted to hire others to help complete the work, are you allowed to?
  • Is it work that requires a specific skill?
  • Does the work have an end date, or is it permanent?
  • Are you paid hourly or by the job?
  • Were you led to believe you were an employee?

If you work in fields like graphic design and freelance writing, the rules may require you to use the ABC test first, and if that hasn’t helped you decide if you’re a freelance contractor or employee, switch to Borello. Some people may be required to use Borello, including:

  • Accountants
  • Architects
  • Direct salespeople
  • Insurance brokers
  • Investment advisors
  • Lawyers
  • Private investigators

Take time to go through these tests and determine if you’re being miscategorized. If you are, you could be losing out on valuable employment benefits, such as overtime wages.

 Why Does It Matter?

 If a company has labeled you as an independent contractor, you’re required to pay your own self-employment taxes. Plus, you lose out on some benefits that regular employees get. This includes health and dental insurance plans, 401k contributions, paid sick leave, and unemployment insurance.

 Independent contractors don’t get protection from wage and hour laws or retaliation laws. And that’s why it’s important to make sure you’re not under the company’s control. If you’re going to do the work of an employee, you should be entitled to those benefits. If you’re labeled a self-employed contractor and the employer is mistreating you by refusing to pay overtime or threatening to breach the contract by firing you, you can’t go to California’s Labor Commissioner to seek help. You’re on your own.

 Suppose you take a job paying $1,000 a week for what the company says takes 20 hours a week. If it takes four times longer than the company said, you wouldn’t be making California’s minimum wage. As an independent contractor, you cannot file a wage complaint with the state. That’s why it’s important to be classified correctly.

 If a company has classified you as a self-employed contractor and has you doing the work of a regular employer, the company faces fines. It can lead to penalties of up to $25,000 per violation.

 In Pennsylvania, hundreds of home care aides were misclassified as contractors, and the company they worked for refused to pay them overtime or provide mileage reimbursement. The U.S. District Court found in favor of the aides and required the company to pay more than $2.4 million in overtime pay and civil penalties.

 A California scooter rental company faced a class-action lawsuit for misclassifying independent contractors. They had workers install a company app, go to locations to get scooters, bring them home to recharge them, and return them to specific areas at a designated time. The workers were employees rather than contractors because the company controlled and supervised much of the workers’ job duties. The company agreed to pay $8.5 million.

 What Do You Do If You’re Being Misclassified?

 What if you feel your job duties fall more along the lines of those an employee completes? After going through the ABC or Borello tests, you’re confident you should be an employee. What can you do? Talk to the company first and ask them why you’re being classified as a contractor when you believe you meet the criteria for employment. If you still disagree, reach out to an attorney specializing in employment law.

 There is the chance that the company will retaliate against you for filing a complaint. You’re protected from retaliation. You may not be able to fight them through the California Labor Commissioner, but Shegerian Conniff’s team of employment law specialists can help you decide the next steps to take. If it’s best to take the company to court, our attorneys have expertise in trial law and are ready to fight for you. Schedule a free consultation on our website.

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