Can my Employer Classify Me as an Independent Contractor?

A common legal challenge facing small businesses and entrepreneurs is whether or not they can use the Independent Contractor status for people they employ. Many small businesses would rather use Independent Contractors. With no workers’ compensation, no withholding tax, no payroll tax, no employment law liability; running your business is easier and less costly and time-consuming.

Millions of workers in the U.S. are retained as “independent contractors” rather than “employees”. Home health aides, nannies, truck drivers, gardeners, general contractors, taxi drivers, limousine drivers, barbers, hair stylists and many others are hired as Independent Contractors.

Many of these workers prefer the independent contractor status for its flexibility, including the ability to decide how and when to work and for whom.

But a new law recently signed by Gov. Jerry Brown raises a large red flag for anyone using independent contractors in California because it dramatically raises the chance for businesses found to have willfully misclassified workers.

In October of 2011,California enacted a new law prohibiting “willful misclassification of independent contractors.”

Governor Brown signed the legislation that prohibits the willful misclassification and creates civil penalties of between $5,000 and $25,000 for each willful misclassification of a worker.

SECTION 1. Section 226.8 is added to the Labor Code, to read:

226.8. (a) It is unlawful for any person or employer to engage in any of the following activities:

(1) Willful misclassification of an individual as an independent contractor.

(2) Charging an individual who has been willfully misclassified as an independent contractor a fee, or making any deductions from compensation, for any purpose, including for goods, materials, space rental, services, government licenses, repairs, equipment maintenance, or fines arising from the individual’s employment where any of the acts described in this paragraph would have violated the law if the individual had not been misclassified.

(b) If the Labor and Workforce Development Agency or a court issues a determination that a person or employer has engaged in any of the enumerated violations of subdivision (a), (click here) the person or employer shall be subject to a civil penalty of not less than five thousand dollars ($5,000) and not more than fifteen thousand dollars ($15,000) for each violation, in addition to any other penalties or fines permitted by law.

In summary, under the newly enacted statute — Labor Code §226.8 — any entity that “willfully misclassifies” an individual as an “independent contractor,” when that individual is determined to have actually been an “employee,” faces stiff civil penalties.

The law signed by Brown (effective Jan. 1, 2012) amends the Labor Code to add two new sections specifically aimed at the perceived practice of misclassification of employees as independent contractors and the purported loss of substantial dollars in unpaid taxes.

If you are a small business owner or a worker with questions about job classification, you will benefit from contacting a labor attorney specializing in this area.

Three Keys to Success in Legal Matching

People will increasingly continue to turn to legal matching when they need to find a lawyer. attorney-blogs.info is a matching service that operates in the USA and does not require monthly fees or obligations.

attorney-blogs.info is promoted as a free service to help people find an attorney. Lawyers only pay when they choose to contact a potential client after reviewing the claim.

Even if the site does not bring in much business, you do not risk anything. We operates on a no obligation, incentive-based form of billing for a legal matching service.

Legal matching allows the client to choose the attorney.

At attorney-blogs.info, after a client submits a claim, we forward it to all attorneys in our network that match the client’s needs. The claim is open until a limited number of attorneys respond. The client receives the attorney responses and then chooses the attorney who offers the best response.

The best response involves different factors. Some factors, like non-negotiable fees and location, may turn a client away and nothing can be done to avoid it. However, there are three factors that attorneys can focus on to ensure the best chances at securing a client.

1. Quick Response

A fast response shows that you are attentive to your clients needs. The prospective client will appreciate and respect a fast response and will be more likely to choose you as their attorney because of it.

2. The Right Tone

Lawsuits usually involve a difficult personal or business situation. Many clients want an attorney that recognize this. You should listen, have sympathy, and be honest. This should be a given, but it is important to provide the right tone when you contact a client.

3. Applicable Experience

The most persuasive response to a client’s inquiry explains your experience with similar legal problems and what you can do to help. If appropriate, it is helpful to explain the results you have achieved for clients with similar situations.

It is also useful to provide your website and/or an attorney feedback/rating system for more information.