California employers sometimes classify workers as independent contractors to avoid paying overtime, providing meal and rest breaks, reimbursing business expenses, contributing to payroll taxes, or offering benefits. Often, the classification is wrong.
Under the ABC test codified at Labor Code § 2775, workers are presumed to be employees unless the hiring entity proves all three prongs: (A) the worker is free from the company’s control and direction; (B) the work performed is outside the usual course of the company’s business; and (C) the worker is customarily engaged in an independently established trade. Failing any one prong means the worker is an employee under California law.
In addition, employers sometimes classify employees as “exempt” from overtime and other wage-and-hour protections when they legally should be “non-exempt.” At first glance, this can sound like a perk—after all, exempt employees are typically salaried and may enjoy perceived flexibility. But in practice, misclassification almost always benefits the employer at the employee’s expense.
Under California law, non-exempt employees are entitled to overtime pay, meal and rest breaks, and other protections. Exempt employees, by contrast, must meet strict legal tests—primarily involving their job duties and salary level. Simply paying someone a salary or giving them a managerial-sounding title is not enough.
Misclassified workers can recover unpaid minimum and overtime wages, missed meal and rest break premiums, unreimbursed business expenses under § 2802, waiting time penalties, and civil penalties under PAGA.
If you think you have been misclassified, contact us immediately.