The misclassification of employees as independent contractors has very negative effects for employees in California, including requiring employees to pay all of the payroll taxes on their income (rather than payroll taxes being split equally between employees and employers) and removing employees from the expansive protections afforded employees under California’s Labor Code (including overtime, mandatory sick pay, meal and rest breaks, and more).

Employers that misclassify employees as independent contractors are subject to penalties that range from $5,000 to $10,000 for each violation of Labor Code § 226.8(a). An employer that has engaged in a pattern or practice of violations is subject to an increased penalty of between $10,000 and $25,000 per violation. (Labor Code § 226.8(b)–(c).) These claims may be brought pursuant to the Labor Code Private Attorneys General Act of 2004 (also known as “PAGA”). (Labor Code §§ 2698–2699.5; Noe v. Superior Court (2015) 237 CA4th 316, 340).

The determination of whether an employee is misclassified as an independent contractor is a legal analysis requiring comprehensive knowledge of California’s labor laws and regulations. If you believe you may be misclassified, you should consult an attorney immediately.