If you follow the news regularly, you have likely heard about or read stories lately on the subject of employee misclassification. Employee misclassification occurs most often when an employer wrongly classifies an employee as an independent contractor. One of the highly publicized cases that recently occurred in the Bay Area involved Uber, the ride sharing company.
Details of the case
The case was brought by a San Francisco based Uber driver. The driver filed a complaint with the California Labor Commission, alleging that the company misclassified her as an independent contractor, rather than an employee. The labor commission agreed with the driver and ordered Uber to reimburse her $0.56 per mile for the 6,468 miles she had driven during her employment. Additionally, the commission awarded the driver $256 for toll charges, $274.12 in interest and $4,152 for other miscellaneous expenses. Although the driver had asked for reimbursement of wages for 470 hours she had worked for the company, this was denied, as she was unable to provide the necessary payment documentation.
This ruling was handed down earlier this year in March, but was made public in June when Uber filed an appeal in state court. This is not the only employee misclassification action the company faces, as a class action is pending in the Northern District Court of California, involving more than 160,000 drivers. The ruling of this lawsuit could dramatically affect companies doing business as part of the thriving start-up culture of recent years, forcing them to reassess the way they do business.
Why does worker classification matter?
In may seem that the difference between an employee and independent contractor is academic and trivial. However, in reality, it is very important. The reason for this is the employee’s status determines his or her rights, benefits, and tax implications. For example, workers classified as independent contractors are responsible for withholding their own taxes as well as Medicare and Social Security contributions. Additionally, such workers are not entitled to labor protections and benefits provided to employees of the company such as overtime, minimum wage guarantees, health insurance, pension or retirement plans, disability benefits, paid time off, unemployment compensation, or workers’ compensation benefits.
How do I know what type of worker I am?
Although California courts consider several factors in determining whether the worker is an employee or independent contractor, the primary determinant is the degree of control the employer has over the means of accomplishing the result it desires. As a result, if your employer directs and controls the way you do your work, you are likely an employee. However, if you have control over the way your job is done without significant feedback from your employer, you are more likely an independent contractor. However, as stated earlier, there are exceptions to this rule and other factors in the employment relationship that a court may be consider.
What to do if you suspect misclassification
Employers often misclassify their workers as a cost-saving measure to avoid paying benefits, taxes, payroll and other expenses. In doing so, these companies hope to reap greater profits at the detriment of their workers. However, this is an illegal practice that carries heavy penalties under the law. If you suspect that your employer has misclassified you as an independent contractor, contact the employment law attorneys at The Armstrong Law Firm. Our attorneys can explain your options and recover the compensation that you are due under California law for the intentional misclassification.