Employee or Independent Contractor in California? Why Classification Matters
By Dion Macbeth, California attorney
Calling someone an independent contractor does not settle the legal question. Classification can affect wages, expenses, taxes, benefits, penalties, and the business's relationship with its workforce.
The real relationship matters
The parties' written agreement is relevant but not always controlling. Control, the nature of the work, integration into the business, and the worker's independent enterprise may all be examined under the applicable test.
A proactive audit can reduce exposure
Businesses should review classifications, onboarding, payment practices, expense policies, and contractor agreements before a dispute or agency inquiry. Corrections should be planned with employment and tax counsel.
Common Questions
Further Detail
The label alone may not control. The complete working relationship and applicable legal test matter.
Potential risks include unpaid wages, overtime, expense reimbursement, taxes, benefits, penalties, and class or representative claims.
Legal Guidance
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