What to Know

Misclassification as an Independent Contractor in California

Employee Misclassification As Independent Contractor. Los Angeles, California.

The Los Angeles employment lawyer at The Sempers Law Firm represents clients misclassified as independent contractors in the state of California. Schedule a free consultation, call us at 888-762-0297.

Who qualifies as an independent contractor in California?

Assembly Bill 5 (AB 5), effective January 1, 2020, introduced legislation requiring that the ABC test is used to determine employment status. Under AB 5, most workers are presumed to be an employee unless an employer can establish - using the ABC test, that the worker is an independent contractor. Under the ABC test, the employer must prove all three of the following conditions are met for a worker to be considered an independent contractor:

1) Free from Control and Discretion. Independent contractors are free from the control and direction of their employer.

2) Outside the Normal Course and Scope of Business. Independent contractors perform work that is outside the ordinary course and scope of the employer's business.

3) Has an Established Trade or Business. An independent contractor has an independently established occupation, trade, or business.

Under AB 5, employers have the burden of proving that a worker qualified as an independent contractor under the ABC test, not the other way around.

Is a gig worker an independent contractor?

Assembly Bill 5 is also commonly referred to as the "gig worker law." However, in 2020, Proposition 22, which became the most expensive ballot measure in California history, granted app-based transportation and delivery companies (DoorDash, Uber, Lyft, and others) an exemption to AB 5 by allowing them to classify gig workers as "independent contractors."

Note: On August 20, 2021, a California judge ruled Proposition 22 unconstitutional.

California independent contractor laws (2020)

California Labor Code § 3353 defines an independent contractor as a worker who renders their services:

  • For "a specified recompense"
  • For "a specified result" and
  • Under the control of their principal as to the result of the work.

Legislators passed Assembly Bill 5 to require companies across California to reclassify independent contractors as employees using the ABC test.

Initially, AB 5 exempted certain occupations, which includes:

  • Lawyers
  • Insurance agents
  • Doctors
  • Dentists
  • Accountants
  • Barbers and cosmetologists
  • Real estate brokers and agents

However, California legislators later expanded the list of occupations that are exempt from AB 5. On September 4, 2020, the California governor signed Assembly Bill 2257 to provide exceptions to:

  • Translators
  • Freelance writers
  • Freelance editors
  • Copy editors
  • Real estate appraisers
  • Photojournalists
  • Cartographers
  • Newspaper cartoonists
  • Fine artists
  • Still photographers
  • Youth sports coaches
  • Professional foresters
  • Landscape architects
  • Producers
  • Some musicians

Legislators may introduce more exceptions to AB 5, which is why you want to contact an attorney if you believe you have been misclassified as an independent contractor.

What laws protect independent contractors?

California's Fair Employment and Housing Act (FEHA) provides protections from harassment to independent contractors because FEHA protects both employees and "persons providing services pursuant to a contract."

Are independent contractors eligible for overtime pay?

Under the Fair Labor Standards Act (FLSA), independent contractors are not employees and are not eligible for overtime pay. Since independent contractors are not covered by California's wage and hour laws, they are not entitled to compensation for overtime unless misclassified.

How does an independent contractor pay taxes?

The Internal Revenue Service (IRS) treats independent contractors as self-employed persons, for tax purposes. It means that independent contractors are subject to different rules and requirements than employees when paying taxes.

Independent contractor rights

Independent contractors do not have the same rights under state and federal law that employees have, though they still have rights. While an independent contractor is not entitled to overtime pay, minimum wage, sick time, workers' compensation benefits, and other protections, they have the following rights:

  • The right to work where and when you want
  • The right to make decisions
  • The right to control your work
  • The right to manage your business
  • The right to receive payment for the completed work
  • The right to challenge your employment status

Can I sue for employee misclassification?

Yes, employees misclassified as independent contractors have a right to sue their employer. Employees can sue their employer for the misclassification and recover back payments, unpaid minimum wages, overtime, meal and rest break payments, and other expenses and damages.

Penalties for employee misclassification in California

A company that misclassifies an employee as an independent contractor may expose itself to the following penalties:

  • Unpaid minimum wage penalties
  • Wage statement penalties
  • Back payments
  • Waiting time penalties
  • Meal period premium wages
  • Rest break premium wages
  • Court costs and legal fees
  • Attorneys' fees
  • Interest
  • IRS penalties
  • Monetary damages for retaliation, if applicable

With questions about employee misclassification or to learn what damages are available in your case, 888-762-0297.

How much can you sue an employer for misclassification?

California Labor Code § 226.8 makes it unlawful for employers to "willfully" misclassify employees as independent contractors. Employers can face penalties for misclassifying employees ranging from $5,000 to $15,000 for each violation under this section of the labor code.

Where the employer has engaged in a pattern or practice of misclassification, the penalty can go up to $25,000 for each violation of the statute. For more information, call our office.

Is an independent contractor in California eligible for maternity leave?

The Family and Medical Leave Act (FMLA), which provides covered employees with up to 12 weeks of job-protected leave per year, does not apply to independent contractors. However, California's Paid Family Leave (PFL) may provide benefit payments to covered self-employed individuals or independent contractors for up to eight weeks.

Are contractors entitled to meal periods and paid rest breaks?

Under California law, independent contractors are not entitled to meal and paid rest breaks, while non-exempt employees are.

For more information

To discuss your case, call us at 888-762-0297 and ask to speak with an attorney who handles independent contractor cases.

Your consultation will be confidential, informative, and free.

We take all cases on contingency and advance all costs - which we only are reimbursed if we successfully recover on your behalf.

We represent clients in Los Angeles, Sacramento, San Diego, San Bernardino, Santa Clara, San Francisco, San Jose, Oakland, Orange County, and throughout all of California.

Last updated on September 7, 2021.

Additional Resources

• Assembly Bill 5 (AB 5)

• California Labor Code § 3353

• California Assembly Bill 2257

• California’s Fair Employment and Housing Act(FEHA)

• IRS: Self-Employed Individuals Tax Center - Independent Contractor

• California Labor Code § 226.8

• Section 1981

• Family and Medical Leave Act (FMLA)