Employee misclassification is a serious issue affecting workers in California. It occurs when employers label employees as independent contractors. This can impact workers’ benefits and protections.
How is employee misclassification defined in California?
In California, the distinction between employees and independent contractors is especially important due to the state’s strong labor laws. Under the “ABC Test,” workers are independent contractors if all three of the following conditions apply:
- They are free from the control and direction of the hiring person in connection with the performance of the work, both under the contract for the performance of the work and in fact.
- They perform work outside of the usual scope of the hirer’s business.
- They work in an independently-established trade, occupation, or business of the same nature as that involved in the work performed.
Failing to meet one or more of these requirements makes one an employee. Labeling them otherwise counts as employee misclassification.
Why is it a problem?
Employees receive a host of benefits that independent contractors do not, such as minimum wage, overtime pay, unemployment insurance, and workers’ compensation.
Misclassified workers often work long hours without appropriate compensation, undermining their financial stability and quality of life. What’s more, while employees can claim unemployment benefits, misclassified independent contractors lack this safety net. Employee misclassification remains an ongoing issue that all workers must be aware of. The good news is there are measures in place to mitigate this problem. Knowing your rights as a worker can ensure you receive all the protections you are entitled to under the law.
