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Correctly categorize your California employees

On Behalf of | Aug 5, 2020 | Wage & Hour Claims |

Categorizing employees correctly under state and federal law can help businesses avoid serious legal sanctions. However, it can be challenging to understand whether a worker qualifies as an employee or an independent contractor.

Review these factors to make sure you pay your California employees correctly.

Independent contractor guidelines

A worker qualifies as an independent contractor only if he or she works without direct supervision from a manager or company representative. Independent contractors perform work outside the scope of typical business operations. For example, a digital designer you hired to complete your company’s new website would be an independent contractor.

These individuals can use the methods and procedures they choose to complete their contracted project and do not necessarily adhere to the company policies and procedures. Typically, the person has his or her own business and makes independent decisions for that business. They perform their own tools and usually work at the location of their choice.

Employee guidelines

Sometimes, workers’ duties and tasks may blur the line between independent contractors and employees. You may need to recategorize a contractor as an employee of the company if these factors apply:

  • You have employees who complete the same tasks as the worker in question.
  • You provide the tools, equipment and supplies the worker needs to complete assigned tasks.
  • The worker performs unskilled or semi-skilled labor.
  • You invested in training for the worker.

When an independent contractor becomes an employee, he or she will become eligible for benefits such as unemployment insurance, family and medical leave, and overtime pay. Workers who think they have an incorrect employment classification can file a claim with the Department of Labor and the IRS.