Are you properly classified?

In the wake of the recession, many employers are beginning to hire employees again after having to lay workers off or limit the growth of their workforce. But some may be gun-shy about bringing on full-time employees when the business' economic security seems tenuous.

Many employers do not know what their financial situation will look like in twelve months. This may prompt them to seek out independent contractors to perform the work they need, rather than full-time employees. Making use of contractors can save companies money on things like employee benefits, taxes and overtime pay.

This has led some employers to improperly classify some workers. And the U.S. Department of Labor and the IRS have been investigating employers who may be guilty of misclassification. In addition, those businesses are facing backlash in the form of class action lawsuits from contractors who believe they should be classified as employees.

There is no hard and fast rule for what makes someone a contractor or an employee. Courts and enforcement agencies may look at a number of factors, but one of the major issues is how much control a worker exerts over his or her own work. If someone works hours set by the employer and has to perform the work in a certain way, they will usually be considered an employee.

But if a worker is free to set his or her own hours, perform the work how they want to and subcontract it at will, a court will likely find them to be an independent contractor. This ambiguity can be frustrating for employees who believe that their title and the practical reality of their job do not match. In such a situation it may be wise to speak with an attorney.

Source: The Grand Forks Herald, "Officials scrutinize employer use of independent contractors," Annie Baxter, March 25, 2013

To learn more about employee rights in California, please visit our website.

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