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Independent Contractors Overtime Pay Attorney

In California, employees are required to pay employees for overtime hours in most cases, but unfortunately, they often fail to do so. Employers use tricks to get away with this illegal practice, including misclassifying workers as independent contractors, who are exempt from the law that requires workers to be paid overtime. If you’ve been a victim of misclassification, speak to an independent contractors overtime pay attorney—you might have a wage theft case against your employer.

Ferraro Vega Employment Lawyers is an employment and labor law firm that represents southern California workers in litigation regarding wage theft, wrongful termination, and other illegal labor practices that violate their rights. We represent the employees and laborers who are not paid the wages owed to them and who are victims of unfair treatment by employers and co-workers in the workplace.

Fair Labor Is a Federal Law

The Fair Labor Standards Act (FLSA) sets forth the federal law that when an employee works over 40 hours in a week, they are entitled to overtime wages at the rate of 1.5 times their standard pay rate. This is also called “time and a half.”

For example, if an employee’s standard rate of pay is $10 per hour, for the first 40 hours they work within one seven-day pay period, they are to be paid their standard rate of pay ($10 per hour). For any amount of work performed in excess of 40 hours, they should be paid 1.5 times $10 per hour, which, in this example, would be $15 per hour.

There are some exceptions to this law, however, in that certain classifications of workers, specifically independent contractors, are not guaranteed time and a half for work performed over 40 hours in one week. These types of workers do not have protected wages for overtime under the FLSA. Independent contractors are self-employed workers who are, by definition, contracted to provide services to a company based on a project or need and are not employed by one company.

Independent Contractor vs. Employee

Independent contractors have the freedom to perform their work at their own discretion, and they have control over their services, such as where they work and when they work. In most cases, the hirer only has control over the result of the work, though these characteristics of duties do not definitively classify a worker as an independent contractor.

It is a common business practice for companies to hire independent contractors to perform certain tasks rather than asking their regularly employed workers to do them. For instance, a company may hire an independent contractor to revamp its website rather than handle the job in-house. There may not be anyone on staff who knows about web design, so hiring an independent contractor allows the company to have a professional with specific skills do the job.

The company probably doesn’t need a full-time web designer on staff, and the designer can charge what they want to without being subject to the pay rate of the company. It’s convenient for all parties involved. However, because employers are exempt from paying independent contractors overtime pay, many companies deliberately misclassify workers as independent contractors when they should be classified as employees.

Industries of Concern for Misclassification of Employees

There are certain industries in which it is more common for companies to misclassify employees as independent contractors. Some of the most common industries where misclassification occurs are listed below.

If you work in any of these industries and are classified as an independent contractor, you should review your position and consider if you have been misclassified by your employer. In this case, you’re more likely to be misclassified as an independent contractor than those in other industries. An independent contractors overtime pay attorney may be able to help.

• Construction
• Energy, Oil, Gas, or Petrochemical Work
• Installation Work
• Staffing Agency Work
• Insurance
• Inspectors
• Disaster Recovery and Clean Up
• Welders
• Home Health Care
• Financial Industries
• IT or Computer Desk Help

What Is a 1099 Employee?

One thing that definitively sets an independent contractor position apart from an employee on paper is the way they pay taxes. At the end of the year, an independent contractor will receive a 1099 tax form. This form is specifically for individuals who ” work for themselves.” Because taxes aren’t collected from their checks throughout the year, they might need to pay more than other employees.

Thus, they are considered to be self-employed and offer niche services to multiple companies on an as-needed basis. These workers are often referred to as “1099 employees.”

A true employee, on the other hand, works directly for their company. They are required to show up at the company at their scheduled time daily and are, theoretically, expected to continue doing so indefinitely. Additionally, unlike an independent contractor, who offers services outside of the company’s industry, an employee has a line of work that is in line with the company’s directive objectives, purposes, and services.

How to Tell if You Are a Victim of Misclassification

When an employee is misclassified by their employer to avoid laws that require them to pay overtime, they are breaking the law and, essentially, stealing wages from workers. As a result, it is important for those workers who are classified by a company as independent contractors to know how to confirm the classification of their position. Below are some tips from the IRS to help workers know for sure.

Ask yourself the following questions about your position. If you answer yes to most or all, you should be classified as an employee:

• Does the company you work for tell you when to show up to work?
• Does the company you work for set the number of hours you can and must work?
• Does the company you work for control what work you do while working?
• Does the company you work for control the way you do your work?
• Does the company you work for determine how you are paid?
• Does the company you work for provide you with the tools necessary to perform your job duties?
• Disaster Recovery and Clean Up
• Does the company you work for determine the amount of earnings you are paid, and is that amount predetermined (i.e., are you paid a set rate weekly or daily)?

Additionally, if you answer no to the next set of questions, you should be classified as an employee.

• Do you provide services that are not aligned with what your company sells, offers, or makes?
• Do you have a relationship with your company that is temporary and expected to end when a project is complete or service is rendered?
• Have you invested resources in the requirements to carry out your job (i.e., did you buy your own computer to do your work on)?

What Happens When Employees Are Misclassified?

The consequences of misclassification for employees wrongly labeled as independent contractors are more than just missed wages. A study conducted in 2021 estimates the cost of misclassification to be as much as $20,000 per year to independent contractors who are entitled to employee classification and its associated advantages.

Misclassification denies employees benefits such as workers’ compensation benefits; tax benefits like employer contributions to Medicare and Social Security taxes; workers’ rights such as lunch breaks, vacation time, and sick leave; unemployment benefits; retirement plans; and health and dental insurance. It’s easy to see why some dishonest companies would choose to misclassify workers to avoid having to incur the expense of employees.

Failing to provide adequate pay for misclassified workers inhibits the ability of these employees to support themselves and their families. It also diminishes their purchasing power, which, in turn, negatively affects the economy. Misclassification of workers also undermines the competitive edge that is the livelihood of the US economy. Companies that are in compliance with the law are at a competitive disadvantage when their competition pays less for labor.

What Are the Penalties for Employers Who Misclassify Workers?

Employers who are caught misclassifying workers can face serious consequences. It is important for workers to bring forth allegations of misclassification of independent contractors so that employers will not continue to steal wages and opportunities from other California workers. In San Diego, California, if an employer is found to, in fact, be guilty of worker misclassification, they face serious consequences, which may include the following:

• Liability Social Security and Medicare taxes for all misclassified workers
• Criminal charges for wage theft, including fines beginning at $100 per employee for the first violation, which goes up to $200 for subsequent violations plus 25% of the illegally held wages
• Additional fines for falsifying wage statements and potential fines payable to the IRS for tax evasion

Seeking Legal Help from an Independent Contractors Overtime Pay Attorney

If you believe you were intentionally misclassified as an independent contractor by your employer to avoid paying you overtime wages and other employee benefits, call Ferraro Vega Employment Lawyers to speak with a member of our knowledgeable legal team about your case.

We have the necessary resources, skills, and experience to represent you. If your employer is found to, in fact, be guilty of misclassification, you could potentially recover the wages that are rightfully yours and were stolen from you by your employer.