Los Angeles Misclassification Attorney
What is Misclassification of An Employee?
Too often employers will classify their workers as independent contractors rather than as actual employees. They do this for a number of reasons: to avoid paying overtime, to avoid paying the mandated minimum wage, save on their taxes, avoid having to pay insurance, avoid paying worker’s compensation claims, and many other reasons. This practice is not only unfair, deceitful, and manipulative but it is also illegal. Not only is the employee disadvantaged, but the State and Federal government is also deprived of taxes the employer should be paying.
Have You Been Misclassified As An Independent Contractor?
In 2018, the California Supreme Court, in Dynamex Operations West, Inc. v. Superior Court, clarified the standard to determine whether an individual is an employee or whether they are independent contractors. In doing so, the Court created a presumption that employees are not independent contractors unless the “ABC” test is met. In other words, it is the employer’s job to prove that an individual is an independent contractor. The following test must be met:
- The worker must be free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
- The worker must perform work that is outside the usual course of the hiring entity’s business; and
- The worker must customarily be engaged in an independently established trade, occupation, or business of the same nature as the work performed.
If ANY of the above three factors are not met, then your employer has failed to show that you are an independent contractor.
Why Does It Matter If I Have Been Classified As Independent Contractor Instead Of An Employee?
It is important for a number of reasons. To illustrate, let’s say you work for Corporation X for 45 hours a week for 5 years at $15 an hour. Under these circumstances you would be owed $27,000 in back pay for unpaid wages: 5 hours multiplied by $22.50 (which is the overtime rate, $15 x 1.5) multiplied by 240 weeks (5 years).
However, if you qualify as an independent contractor, you will not be owed the extra $27,000 in overtime pay. Therefore, determining whether you qualify as an independent contractor is essential in finding out whether you have a claim for back pay.
Also, aside from the above listed scenario, a misclassified employee will have the following liabilities, among other things:
the misclassified employee will have to pay all of their Social Security and Medicare taxes by themselves
the misclassified employee will be ineligible for unemployment benefits.
the misclassified employee will be ineligible for worker’s compensation benefits.
the misclassified employee will have none of the workplace rights that employees usually have, such as a right to a minimum wage, overtime pay, sick pay, and rest breaks
What Are My Remedies If I Have Been Misclassified At Work?
There are a couple of remedies available to those who have wrongly been misclassified as an independent contractor when they should have been classified as an employee.
Compensatory Damages: this means that the misclassified employee is entitled to the wages and overtime pay he or she should have been entitled to had the employee been properly classified.
Labor Code section 226: under this section, if your employer misclassifies you, your wage statements are in essence inaccurate. Subsection (e) of Labor Code section 226 states that “an employee suffering injury as a result of a knowing and intentional failure by an employer to comply with subdivision (a) is entitled to recover the greater of all actual damages or fifty dollars ($50) for the initial pay period in which a violation occurs and one hundred dollars ($100) per employee for each violation in a subsequent pay period, not to exceed an aggregate penalty of four thousand dollars ($4,000), and is entitled to an award of costs and reasonable attorney’s fees.” Therefore, the employee can recover up to $4,000 in penalties on top of the overtime pay they were entitled to, plus attorney’s fees.
Labor Code section 226.8: it is illegal for your employer to willfully, or intentionally, misclassify you as an independent contractor. If he or she knows that you should not be classified as an independent contractor but still does so, you may be entitled to statutory fees. For example, Labor Code section 226.8(c) states that “the person or employer has engaged in or is engaging in a pattern or practice of these violations, the person or employer shall be subject to a civil penalty of not less than ten thousand dollars ($10,000) and not more than twenty-five thousand dollars ($25,000) for each violation, in addition to any other penalties or fines permitted by law.” In other words, the employer who is found to violate section 226.8 is subject to a fine of $10,000 to $25,000.
Labor Code section 2753: under this section, those who assist an employer in willfully misclassifying an employer as an independent contractor may be liable jointly and severally liable.
What Are Some Examples of Previous Misclassification Lawsuits?
- $227,000,000: FedEx routinely misclassified thousands of drivers and independent contractors when they should of have been classified as full-time employees. Because of the classification of drivers as independent contractors, drivers had been unable to receive many employment benefits, including sick leave. FedEx agreed to settle the case for $227,000,000.
- $1,000,000: General Assembly, a for-profit school that teaches courses in design, business and technology skills often employed multiple instructors as independent contractors versus employees. They were denied overtime pay and rest breaks. The case settled for $1,000,000.
- Field Asset Services, a property servicing company, misclassified 11 workers and independent contractors instead of employees. The workers alleged they were denied overtime benefits and were required to pay business expenses on their own without reimbursement. Each worker received anywhere from $150,000 to $200,000 each.
- $6,000,000: Lowe’s Home Centers were sued by a class of its home improvement contractors. The contractors claimed that they had been misclassified as independent contractors instead of employees. In essence, the individuals and businesses were hired to do improvement work for Lowe’s customers. The complaint alleged that (1) Lowe’s Production Office managed each installation project, (2)Lowe’s set the fees to be earned by each home improvement contractor, and (3) Lowe’s imposed a non-compete covenant on installers. The case eventually settled for $6,500,000.
Talk to a Los Angeles Misclassification Lawyer today. We offer free consultations and you pay nothing unless we win.
The lawyers at Miracle Mile Law Group are specially trained in handling misclassification lawsuits. If you believe you have been misclassified as an employee or independent contractor, contact a Los Angeles misclassification attorney today. Having a lawyer by your side when trying to prove that you have been misclassified is essential. The lawyers here at Miracle Mile Law Group are trained at identifying what to look for when going up against your employer. These cases are very time sensitive so give us a call at (888) 244-0706 or contact us online for a FREE case evaluation. Remember, we do not take a single dollar unless WE WIN!
Miracle Mile Law Group
3460 Wilshire Blvd. Suite 1210
Los Angeles CA 90010
Tel: (888) 244-0706