A recent article was published about the misclassification of employees and how it is costing them fair compensation and benefits packages. When it comes to employment classification, workers in California will fall under one of the following categories: independent contractor, freelancer or employee. What is the difference, and why does it matter?
An independent contractor would be described as a small business owner. A person in this position may be hired by another company to perform a service. The company will pay this individual for his or her time, but it is not required to offer any other benefits.
A freelancer, someone who works in a creative field and/or the media industry, is just an independent contractor by another name. Freelancers set their own schedules, pick their projects and are not directly supervised, which are all great benefits. The companies who employ them are not required to offer any benefits.
An employee is someone who works a set schedule and is directly supervised. Those in this classification receive regular paychecks and are offered company equipment to use. These individuals are protected under the Fair Labor Standards Act and may be eligible for certain benefits -- such as medical and dental insurances, as well as a retirement account or pension.
Employers often misclassify employees in an effort to save money on taxes and benefits packages. It is believed that this issue affects millions of Americans every year, which matters because they are left without fair compensation. Many people do not complain about it, though. California residents who believe that their employers have purposely misclassified their employment status may be entitled to seek compensation for the losses that misclassification caused them. Legal counsel can help one report the issue to the Department of Labor and, if deemed appropriate, file civil claims against the responsible party in an effort to seek relief.