As of 2017, freelancers were set to become the majority of the U.S. workforce within a decade, according to a study by Upwork and Freelancers Union. The same year, already 36% of the U.S. workforce was made up of freelancers, or more technically, individuals working as independent contractors instead of employees. Many individuals work as independent contractors by choice, though others are forced to take on freelancing out of necessity. While many of these individuals are true independent contractors under the law, some are not. There is an unfortunate trend for businesses to label workers as independent contractors when they are actually employees in order to save money and deny workers certain employment rights. However, a new ruling by the California Supreme Court in Dynamex Operations West v. Superior Court may put an end to this practice in California.
If you work in California and believe you have been misclassified as an independent contractor by your employee, contact a San Francisco employee misclassification lawyer at Willoughby Brod, LLP. Our legal team has years of experience handling all types of employment law cases, including worker misclassification.Independent Contractors v. Employees
There is a significant difference between working as an employee versus an independent contractor. As an employee, your working relationship with your employer is regulated by federal and state employment laws. You have many rights and protections in regard to your hours, breaks, overtime, and wages. You must be paid a certain amount and your hours must be calculated a certain way. Depending on your status as an employee, you must be paid overtime at a certain rate. Businesses also have other responsibilities when it comes to hiring employees. They may be required to offer benefits, such as health insurance. Business must pay federal Social Security, payroll, unemployment insurance, and state employment taxes and offer workers’ compensation insurance.
It is often easier and cheaper for businesses to label workers as independent contractors, whether or not this is a lawful and appropriate classification. If you believe you have been wrongly classified as an independent contractor, contact an employee misclassification attorney for San Francisco to learn more about your rights and options.
Independent contractors are individuals who provide a service to the company for a certain fee. That person’s hours and wages are not controlled by federal and state laws like an employee’s hours and wages. An independent contractor does not receive any benefits from a business and must therefore obtain health insurance and a retirement savings account on his or her own. An independent contractor does not benefit from tax withholdings in his or her paychecks. They must pay their own income tax as well as self-employment taxes. It is often more expensive to work as a freelancer, and there are few protections.
While some individuals decide to be freelancers and knowingly tackle these difficulties, others are forced into this disadvantageous position. It is a trend that continuously worries lawmakers and government agencies, such as the Internal Revenue Service (IRS). If you believe you have been mislabeled, do not hesitate to contact an employee misclassification lawyer in San Francisco.Dynamex Operations West v. Superior Court
The California Supreme Court was asked to look at the issue of employee misclassification in Dynamex Operations West v. Superior Court. Both federal and state agencies have found misclassification to be a significant problem in recent years, and because of it, the federal and state governments have lost out on billions in tax revenue. It has also forced millions of workers to go without essential legal protections.
The court was asked to clarify California’s standard for classifying workers as employees or independent contractors for the purposes of California wages. The case arose from delivery drivers suing Dynamex Operations West, Inc. on behalf of themselves and others alleging that Dynamex misclassified them as independent contractors, thereby violating the Industrial Welfare Commission wage order No. 9.
First the court reviewed the previous standard set out in S.G. Borello & Sons, Inc. v. Department of Industrial Relations. The Borello test looked at many factors, however, the most important was the employers “right to control” the means and manner in which the worker performed their duties.
Ultimately, the court rejected the previous standard used and adopted what is known as the ABC Test. Under this test, a worker may be classified as an independent contractor if:
- that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact;
- that the worker performs work that is outside the usual course of the hiring entity’s business; and
- that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.
Under this test, a worker is presumed an employee unless the business can prove that the situation meets each of the elements above. Only if the business can prove all three elements can the worker be labeled an independent contractor. If you believe that under this test, you should now be classified as an employee and not an independent contractor in California, then contact a San Francisco employee misclassification attorney today.
Call Willoughby Brod, LLP at (800) 427-7020 to schedule a free case evaluation.