The misclassification of workers as independent contractors is a serious and persistent problem nationwide, and certainly in California. A study by the U.S. Department of Labor found that between 10% – 30% of audited employers misclassified workers and that up to 95% of workers who claimed they were misclassified as independent contractors were reclassified as employees following review.
Last year, the California Labor Commissioner’s Office brought the first lawsuit under Assembly Bill 5. AB5 is the California law that requires the application of the “ABC test” to determine if workers in California are employees or independent contractors. Under this test, workers can only be classified as independent contractors when a business demonstrates that the workers:
1. Are free from control and direction by the hiring company;
2. Perform work outside the usual course of business of the hiring entity; and
3. Are independently established in that trade, occupation, or business.
AB5 extends employee classification status to gig workers and is designed to regulate companies that hire gig workers in large numbers, such as Uber, Lyft, and DoorDash, and the mobile car wash company, below.
Mobile Wash, Inc.
In the case at hand, Mobile Wash, Inc. used a phone app to offer car washing and detailing services to customers throughout Southern California and Northern California. The mobile car wash company required its workers to use their own cars and buy their own uniforms, insurance, cleaning equipment, supplies and gas. Mobile Wash did not reimburse the workers for these business expenses or travel time in violation of the requirement to pay for all hours worked at no less than the minimum wage. It also unlawfully charged workers a $2 “transaction fee” for every tip left on a credit card.
In California, if an employer requires that an employee wear a uniform, the employer must pay the cost of the uniform. The term “uniform” includes wearing apparel and accessories of distinctive design and color. Other common payroll deductions often made by employers that are unlawful include:
· Medical or physical exams
· Certain business expenses
If you believe your employer has been unlawfully deducting wages from your paycheck, contact an experienced employment attorney to discuss your legal rights.
What can my employer lawfully deduct from my wages?
Under California law, an employer may lawfully deduct the following from an employee’s wages:
· Deductions that are required of the employer by federal or state law, such as income taxes or garnishments.
· Deductions expressly authorized in writing by the employee to cover insurance premiums, hospital or medical dues or other deductions not amounting to a rebate or deduction from the wage paid to the employee.
· Deductions authorized by a collective bargaining or wage agreement, specifically to cover health and welfare or pension payments.
If you feel that you need legal representation, we are happy to review your legal needs and provide consultation. For questions, or to schedule a consultation, contact Webb Law Group today at 559-431-4888 (Fresno) or 619-399-7700 (San Diego).