My employee is suing me because they contend they are misclassified as an independent contractor

Is an employee suing you for misclassifying him/her as an independent contractor rather than an employee?

We excel in protecting employers and business owners from frivolous lawsuits. If a worker is suing you for misclassification, our team will help you develop strategies to get the headache of the lawsuit behind you as quickly as possible.

The biggest recent impact for businesses with regard to independent contractors came from the California Supreme Court who adopted the definition of “employee” in Dynamex Operations West Inc. v. Superior Court of Los Angeles. Under this new standard, it is your burden as the business owner to establish if your worker is an independent contractor. Your worker is an independent contractor if all of the following “ABC” factors are present:

  1. Is free from control and direction by the hiring company;
  2. Performs work outside the usual course of business of the hiring entity; and
  3. Is independently established in that trade, occupation, or business.

Subsequently, after Dynamex Operations West Inc. v. Superior Court of Los Angeles, the California State Legislature passed AB5 which added Section 2750.3 to the California Labor Code starting in 2020. This section of the Labor Code adopted the standard provided in Dynamex and provided exclusions for certain industries from the ABC test. Our staff at Webb Law Group, APC is well-versed in this new law and is very familiar with its practical implications both for business planning and also for defending claims where a business owner has been sued based on this new law.

Frequently Asked Questions

No. Employers must pay any payroll taxes that are due based on the employees they have as of the effective date of January 1, 2020.
Because employers must pay taxes for employees but not for independent contractors, misclassification of workers can constitute tax evasion. Independent contractors must manage and self-report their own tax obligations and can result in tax underpayment if the worker does not understand their responsibilities.

Yes. In addition to penalties for wage violations associated with misclassification, there are civil penalties for willful misclassification (under Labor Code § 226.8 allow for civil penalties between $5,000 and $25,000 per violation). Willful misclassification is defined as knowingly misclassifying an employee as an independent contractor.

There are strict rules in place on exactly what constitutes an employee or independent contractor. Business owners face many challenges today and as a result, are understandably looking for ways to reduce as many costs as possible. As a result, it can be tempting to make risky choices about how a business owner should classify its workers.

Similarly, many workers who were classified as independent contractors are now using the change in law to their advantage. As it can be very difficult to understand the intricacies of who is an employee or an independent contractor under the law in California, these workers are using the confusion to their advantage and are brining lawsuits against business owners. Our office has experience in defending and settling these types of claims and we have a litigation strategy that is focused on using our knowledge of wage and hour employment law to save the business money in the long run.

Webb Law Group, APC will evaluate your policies and agreements. Our attorneys will look into the functional day-to-day operation of your workers. We can draft employment or independent contractor agreements which are tailored to your needs or defend you, should an employee or independent contractor file a case against you. We have ample experience in communicating with Plaintiffs’ attorneys to negotiate a reasonable settlement that will not destroy you financially, should there be any wrongdoing.

Contact Webb Law Group

If you would like to schedule a free, no-risk consultation with Webb Law Group, call 559.431.4888 or 619.399.7700 between 7am and 5:30pm Monday – Friday. You can also submit a request through our online form. If we cannot answer you inquiry immediately, we will be in touch within 24 hours.

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