It is important for Pleasanton businesses to properly classify workers as while classifying a worker as an independent contractor may be more cost efficient upfront, properly classifying a worker will help avoid a lawsuit as well as significant risk of liabilities and penalties relating to treating a worker as an independent contractor only to later have him or her be found to be an employee.
How to Classify Your Workers
While there is no set definition of an independent contractor, the actual determination of a worker’s classification depends on several factors, known as the economic realities test, all of which must be considered, but none is controlling in and of itself. The mere fact that a worker is issued a 1099 as opposed to a W-2 is not determinative. Some of the factors include:
Other factors include the type of occupation and whether it is usually performed in the locality under the direction of an employer or by a specialist without supervision, the worker’s opportunity for profit or loss depending on managerial skills, the length of time during which the services are to be performed, and if the parties believe they are creating an employer-employee relationship.
The existence of a written agreement purporting to establish an independent contractor relationship is not determinative of classification, but helpful.
Legal Help With Employment Misclassification
The experienced Pleasanton employment law attorneys at Garcia & Gurney, ALC have comprehensive knowledge of state and federal employment laws and are prepared to provide you with accurate guidance on any employment matter. Misclassification of a worker can result in liabilities for owed wages, overtime, missed meal and rest breaks, payment of unpaid payroll taxes, disability insurance, workers’ compensation insurance, and unemployment insurance. Call 925-468-0400 or click here if you have any questions regarding your California business to schedule your initial consultation with one of our attorneys.
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