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Wage Claims, Overtime & Other Employee Compensation

MISCLASSIFYING NURSES, CAREGIVERS, COURIERS AND JANITORS AS
INDEPENDENT CONTRACTORS

     In their desire to reduce labor costs, businesses have taken controversial, and sometimes illegal, measures to outsource their manpower to “independent contractors.” By using independent contractors, businesses are freed from paying employment benefits that the law requires for employees. This can save employers as much as 30-60% of labor costs.

     However, a problem arises when the independent contractor arrangement is used in ways prohibited by law. Some employers have been penalized for categorizing nurses, caregivers, couriers, and janitors as independent contractors even though they should be categorized as employees. These employers have also been sued for unfair business practice and made to pay punitive damages because the misclassification practice gave undue advantage to the business against competing businesses.

      While classifying a worker as an independent contractor benefits the employer, it is usually not advantageous to the wage earner. When treated as such, the worker loses most of the benefits guaranteed by the Labor Code including 1) the right to minimum wage,  2) the right to overtime pay, 3) the right to the employer’s share of the social security, unemployment and disability taxes, 4) workers’ compensation protection, 5) additional benefits granted by employers to employees such as sick pay, retirement and profit-sharing plans, 6) protection from discrimination, and 7) protection from wrongful termination of employment.

     It should be noted, however, that the independent contractor status is defined by law and not by the parties’ agreement. According to the California Supreme Court, a worker is an employee and not an independent contractor if any or most of the following factors apply:

• The employer has the right to control the manner and means of job performance.

• The employment relationship may be terminated at will.

• The worker does not engage in an occupation or business distinct from the employer’s.

• The worker’s type of work is usually done under an employer’s supervision.

• The work does not require highly specialized skills or training.

• The employer provides the instrumentalities, tools and place of work.

• There is no set length of time for the performance of the service.

• The worker is paid regularly and not when a job or project is done.

• The worker may not hire other workers to complete a task.

• The services the worker provides are part of the employer’s regular business.

• The parties believe they are creating an employment relationship.

The importance and weight given to each factor depend on the circumstances of each case. However, the right to control the means and manner of the job performance is generally the most important consideration. If the worker has little or no right to control the means and manner of performing the job, then the worker may not be classified as an independent contractor.

     It is important that employees be properly classified as “employees” and not “independent contractors.”  Proper classification will protect the rights and benefits they are entitled to under the law.

© Law Offices C. Joe Sayas, Jr.