Employee Misclassification and How it Affects Los Angeles California Employees

When a California employer makes the decision to hire an employee as a contractor, rather than a permanent employee, the employer must be certain that the worker actually fulfills the contractor status. That's because contractors lose out on very important state and employment benefits that come with being a permanent employee. And if an employee is improperly classified as a contractor, when he or she should be an employee, the employee has the right to assert his or her rights to the benefits.

Contractor Designation - What Is It and Why Is It Used?

There are many reasons that an employer may choose to hire a contractor, rather than a permanent employee. If the business is unstable and the employer is unsure of whether there will be a long-term need for the position, the employer may seek out a contractor to complete the work.Sadly, many employers misclassify employees as contractors to avoid having to pay out benefits, either intentionally or unintentionally. In this scenario, the person who is employed as a contractor loses out on three critical benefits associated with being an employee:

• Unemployment compensation: If a contractor is laid off, he or she is not entitled to receive unemployment compensation. This could lead to substantial hardship for the individual.
• Company benefits: A contractor is not eligible for crucial employee benefits, such as health care, retirement benefits, COBRA coverage, employee stock plans and more.
• Civil Rights violations: A contractor cannot legally sue an employer who commits a Civil Rights violation because technically the contractor is not employed by the company, but rather a contracting agency, usually a recruitment agency.

It is important for an employee to understand that there are legal remedies available to correct and compensate a contractor for employee misclassification. A contractor can consult with a California employment lawyer to assist in filing suit against the employer for the wrongful misclassification.

Legal Test to Determine Whether an Employee is a Contractor

There are many employment law provisions that guide an employer to help determine whether an employee is a contractor or permanent employee. An employer must consider the Fair Labor Standards Act (FLSA), the Department of Labor provisions regarding contractors, the IRS code and the Workers' Compensation Code.

Misclassification Cheats an Employee Out of Critical Benefits and Protections

An employee who is wrongly classified as a contractor loses out on important compensation and benefits, as well as federal and state legal protections. That's why it's important for a misclassified employee to assert his or her rights with an employment law suit against the employer. An employee may be able to recover lost wages and benefits through a lawsuit.

First, it is important to note that an employee who is misclassified as a contractor loses out on significant opportunities for compensation.Overtime wages are not required for contract employees. The employee is also not entitled to unemployment compensation from the state or federal government if he or she is laid off. These two elements of employment that are lost by the designation of contractor could lead to thousands of dollars of lost compensation.

Second, when an employee is misclassified, he or she is not entitled to the legal protections of wrongful termination or discrimination laws. That means that a female contractor who is sexually harassed in the workplace may not have recourse if she reports the harassment and is subsequently fired as a result. If the woman was improperly classified as a contractor, she may be able to file suit against the employer for the misclassification, harassment and the wrongful termination. In such cases, the woman should contact an employment lawyer to understand her rights.

And third, a contractor is not eligible for workers' compensation. After a workplace injury, a contractor is not allowed to file a workers' comp claim. The contractor is required to foot the medical bills and the lost wages without assistance from the employer under the workers' comp provisions. This is a substantial loss for an employee who is misclassified.