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California cracks down on alleged employee misclassification

Employers in California seeking to classify employees as independent contractors should take note of a recent lawsuit filed by the Labor Commissioner's Office. Companies that intentionally misclassify employees as independent contractors may subject themselves to substantial back payments and heavy fines.

A Glendale construction company is the defendant in a multimillion dollar lawsuit filed by the state. It seeks back overtime due employees, late penalties for failure to pay, penalties for failing to pay employees their final pay checks and civil penalties. The total sought from the company is in excess of $6 million.

The wage and hour case involves several hundred employees who have not received their final paychecks from the company. It also involves nearly 200 employees listed as independent contractors.

Employees were required to sign documents claiming they were independent contractors and then paid through a third party company. Some employees were working as much as 68 hours per week and were not paid overtime wages.

The coerced documents may have little effect on the determination of whether or not they were actual employees. California utilizes a multi-factor test to determine a worker's status. The test centers on whether the company has a right to control the work of the worker.

Among the factors considered are rights of the company to supervise the job of the worker, whether the worker maintains a separate business location and if the work is performed on set hours. If the worker is furnished equipment, supplies and training from the company or the job performed is a part of the company's business, those factors lean toward the worker being an actual employee and not an independent contractor.

Those labeled with the status of independent contractor should consider the tasks they perform and how much control their company uses in the performance of their work. If there is any question about a person's status, or what it should be, contacting an employment law attorney is advisable.

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