Are you correctly classified as an employee or an independent contractor? The distinction is critical because it determines what benefits you have a right to, whether you’re defended by certain workplace protections, and how you handle taxes. Misclassification can cost you wages, overtime benefits, workers’ compensation, and even get you in serious trouble with the IRS if you’re not aware that you’ve been wrongly classified and your employer isn’t paying taxes for you. California uses something called the “ABC test” to classify workers, and a Burbank, California, employment attorney can help you figure out if you’re being misclassified and what to do about it.
Why Classification Matters
When you’re an employee, your employer is responsible for withholding taxes, providing benefits like paid sick leave or workers’ compensation, and ensuring that they are faithfully fulfilling all aspects of the California Labor Code as it pertains to you. The Labor Code guarantees things like minimum wage, paid breaks, and overtime pay. Independent contractors, however, manage their own taxes, don’t receive employee benefits, and aren’t protected by most labor laws.
Misclassification is, unfortunately, a common issue, as employers sometimes like to label their workers as contractors to cut costs. This can leave you without the protections you deserve, and it’s particularly shocking if you didn’t realize you were misclassified until you try to claim those benefits.
The ABC Test
California uses the ABC test to determine whether you’re an employee or an independent contractor. The “ABC” simply refers to the fact that it contains three basic criteria. Let’s break down each part so you can see how it applies to your work.
A: Control and Direction of Work
The first test is how much control your employer has over your work. If you’re an employee, your employer has a lot of control. Your employer decides when, where, and how you do your job. Your boss likely sets your schedule, tells you what tasks to prioritize, and specifies how you interact with customers. An employer also provides the tools you need to do your job. If your boss has this level of oversight, that points to an employee relationship.
Independent contractors, by contrast, have more autonomy. They choose their own hours, use their own tools, and decide how to complete a project as long (as they meet any deadlines or other agreements specified in their contract to provide services). If your employer tightly controls your work, they’ll struggle to pass this part of the ABC test.
B: Relationship to the Employer’s Business
The second part of the test examines whether your work is central to your employer’s core business. If your tasks are essential to the company’s operations, and without you the company wouldn’t be able to easily continue, you’re likely an employee. For example, if you’re an IT professional who maintains all of a company’s computers, its internal email system and network, and cares for day-to-day cybersecurity, you’re likely an employee. If you’re an IT professional who has been called in to work on a temporary project that doesn’t involve these day-to-day operations, you’re more likely an independent contractor.
C: Engagement in an Independent Business
The final test asks whether you’re operating your own independent business. Employees work within the structure of their employer’s organization and are part of another organization’s team. Independent contractors operate their own ventures (even if it’s just them working under their own name to sell services). A freelance photographer, for example, markets their services, sets their own rates, and takes on multiple clients rather than working solely for a single company.
Exceptions to the ABC Test
While the ABC test is the default standard in California, certain professions are exempt. These workers are evaluated under the older Borello test, which focuses more on the degree of control an employer has and a few other factors similar to the IRS’s 20-factor test. Creatives, insurance professionals, medical and dental professionals, brokers, direct salespeople, grant writers, marketers, newspaper distributors and carriers, travel agents, real estate appraisers, and freelance writers and editors are typically exempt, along with a few others, but even they may be able to use the ABC test under certain circumstances. That’s why it’s important to talk with a lawyer as soon as possible if you’re unsure.
Steps to Address Misclassification
If you suspect you’re being misclassified as an independent contractor when you should be an employee, you have options, but while California’s labor laws are worker-friendly, that doesn’t mean they’re easy to understand and apply. You can take action and hold your employer accountable, but things will almost always go more smoothly and successfully with an employment lawyer’s help.
Keep Detailed Records of Your Work
Start by documenting everything about your job. Track your hours, tasks, and payments, whether you’re paid by check, direct deposit, or invoice. Save all emails, texts, and contracts with your employer that show how they direct your work. For instance, if you’re a delivery driver and your employer tells you that you have to take a specific route or wear a branded uniform, those details prove you’re being treated like an employee. Even if you’re not sure, keep the record anyway.
Consult a Burbank, California Employment Attorney
Misclassification cases can get complicated, and some employers even have legal teams ready to defend their practices. An employment lawyer familiar with California labor laws, employer tactics, and how the law is usually interpreted in various situations can review yours and build a strong case.
File a Claim or Report the Issue
If your lawyer confirms you’re being misclassified, you have several paths forward. You can file a wage claim with the California Labor Commissioner’s Office to recover unpaid wages, overtime, or benefits like paid rest breaks. Alternatively, you might file a lawsuit against your employer, especially if the misclassification has caused you significant financial harm, such as if you’re just now finding out that you owe a lot of taxes that you assumed your employer was paying. Your lawyer can also help you report the issue to the California Department of Industrial Relations or the Employment Development Department (EDD) for tax or unemployment insurance violations.
Protect Yourself from Retaliation
If your employer fires you, reduces your hours, or takes other actions against you because you challenged your classification, you may have grounds for a retaliation claim. Document any retaliatory actions, even if you’re not sure if that’s what they are, and share them with your attorney.
What Happens to an Employer Who Misclassifies You?
If your employer is found to have misclassified you, they may owe you back pay for wages, overtime, or benefits like paid sick leave or rest breaks. In some cases, you might recover reimbursement for work-related expenses, like tools or mileage, that employees are entitled to in California. Employers who misclassify workers must pay back wages and benefits but also might owe penalties for violating labor laws, tax laws, or workers’ compensation rules.
Can You Sue Your Employer for Misclassification?
Yes, but it’s smart to consult a lawyer first. A lawsuit might be appropriate if you’ve suffered especially significant losses, but if you haven’t, then it might be best to avoid this step if you can. Lawsuits take longer, have uncertain outcomes, and can get expensive. The best thing to do is to take your lawyer’s advice.
Contact Our California Employment Lawyer Today
Contact the experience team of attorneys of Haig B. Kazandjian Lawyers APC today. We proudly serve clients across California. Visit us at our Glendale office at:
Haig B. Kazandjian Lawyers APC
801 N. Brand Blvd., Suite 1015,
Glendale, CA 91203
Phone: (818) 696 2306
