Worker Classification in California: Employees v. Independent Contractors

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Jul 31

General Legal Counsel

Worker Classification in California: Employees v. Independent Contractors

Posted by General Legal Counsel

One of the most confusing aspects of owning a business is hiring. You need additional people working in your business in order to grow and expand, but hiring can feel like a minefield, one misstep and things can easily blow up.

Worker classification is an area that regularly causes headaches for business owners. If you are looking to hire an individual to provide services for your business, you will need to determine whether the person you are hiring is an employee or an independent contractor. Figuring this out can be a little tricky in California but the question really boils down to the level of control you exert as an employer over the worker.

Employees v. Independent Contractors

In order to determine whether or not the person you are hiring is an employee or independent contractor, ask yourself the following questions.

  1. Do I have the right to control how the worker will do the work I have asked them to do?
  2. Will the worker be using my equipment to complete the tasks they have been hired for? This includes some not so obvious “equipment” such as phones, computers and desks?
  3. Do I have the right to control the financial aspects of the worker’s job?
  4. Am I providing the worker with any employee type benefits?
  5. Will the employment relationship continue beyond this specific project? 

Unfortunately, there isn’t a hard and fast rule about employee classification but if you answered any  of these questions affirmatively, you are likely hiring an employee rather than an independent contractor. On the other hand, if the worker will be completing a specific task, using their own equipment and they have professional relationships with other businesses, you may be okay classifying them as a an independent contractor.

Isn’t it Cheaper to Classify Someone as an Independent Contractor?

As an employer, if you hire a traditional employee you have several obligations under the law that don’t apply to someone who is hired an independent contractor.  As a result, it may seem financially advantageous to categorize the worker as an independent contractor, but misclassification can result in serious penalties and fines. Any savings you may have experienced from the misclassification will be eaten up, this is especially true if the misclassification results in a lawsuit. It is best to sort out classification before you bring a worker onboard, so that you can be sure you are handling the relationship appropriately.

If you have any questions about classification, please give us a call. Our experienced employment law attorneys are here to answer your questions and provide you with the help you need. 



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