Employee v. Independent Contractor
As employment attorneys, we are often asked whether an individual is an employee or an independent contractor. While this may seem like an innocent question, understanding the difference can help avoid major legal issues, arguments, and litigations. Generally speaking, most employees are protected by the California Labor Code. Most of the major protections of the Labor Code do not apply to independent contractors.
Employers often try and escape responsibility by calling someone an independent contractor even though this tactic regularly fails in court. Just because someone calls you an independent contractor or even if you agree on this label, it is not dispositive.
What does it mean to be an independent contractor?
Some of the important distinctions between an employee versus an independent contractor include: your rights to overtime, sick leave, vacation pay, and health care benefits. Additionally, the provisions of workers’ compensation laws come into play.
What is the difference between an employee and an independent contractor?
This is a common question regularly posed to our labor law attorney. Broadly speaking, the difference between an employee and an independent contractor is “control”. Simply, if your work is controlled by someone other than you, you may be an employee. If you control how and when you do the work, you may be an independent contractor. To determine whether someone is an independent contractor or an employee, labor law attorney and courts tend to apply several factors.
How does a court or employment attorney determine if someone is an employee or an independent contractor?
To determine whether someone is an employee or a contractor, labor attorneys and courts utilize a number of factors. Not all factors have to be met, and it is possible that if you meet only one factor, you may be found to be an employee. However, the more factors met, the better. Some of the most common factors are as follows:
(a) the extent of control which, by the agreement, the master may exercise over the details of the work;
(b) whether or not the one employed is engaged in a distinct occupation or business;
(c) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;
(d) the skill required in the particular occupation;
(e) whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work;
(f) the length of time for which the person is employed;
(g) the method of payment, whether by the time or by the job;
(h) whether or not the work is a part of the regular business of the employer;
(i) whether or not the parties believe they are creating the relation of master and servant; and
(j) whether the principal is or is not in business.
What is the definition of an Independent Contractor?
An independent contractor is generally defined as a business or individual who performs services for another person based on an agreement, but isn’t subject to the other person or business’s right to control the manner or means in which the work is performed.
Do independent contractors have to be paid overtime?
True independent contractors do not have most of the rights under the California Labor Code, including the rights to overtime. Think of an independent contractor as someone who owns their own business. Their rights are governed by the contract provisions agreed upon between the two businesses. Typically the contract will provide an agreed upon service rate.
What is a contract employee?
As labor law attorneys, this is a common question. Unfortunately, the question itself is defective. You usually cannot be both a contractor AND an employee. You are traditionally either a contractor OR an employee. If someone is calling you a “contract employee,” it’s often a red-flag that the employer may be violating the California Labor code. If you have been called a contract employee, you should contact an employment attorney immediately, as your rights have likely been violated.
What are the rights of independent contractors?
Employees generally have far more rights under California Law than independent contractors. These potential rights as an employee can include the rights to overtime, sick leave, workers’ compensation benefits, and accurate paycheck stubs. However, that does not mean that independent contractors do not have rights. Unpaid independent contractors can still sue to enforce the agreed upon contract. Also, they may have the right to sue for personal injury damages, as the normal exclusions of workers’ compensation would not apply.
If you have questions about the difference between an employee and an independent contractor or if you believe you have been misclassified as an independent contractor, please contact one of our employment attorneys for a free consultation.