Employee Misclassification Laws

A large share of employment litigation concerns whether an employer has correctly “classified” its workers. The two distinctions between workers that matter most are:

1. Employee vs. independent contractor
2. Exempt vs. non-exempt employee

Just because an employer has classified you a certain way or given you a certain job title does not mean that you are classified correctly as far as the state and federal governments are concerned. Read more to see if you may have a misclassification claim.

Independent Contractors vs. Employees

To qualify for the protection of federal (FLSA) or state labor law, an individual must be an “employee.” For this reason, companies will often classify workers as “independent contractors” so they can avoid federal requirements to pay overtime and federal minimum wage.

Under federal law, whether you have been correctly classified as an independent contractor hinges on how much “control” your employer has over where, when, and how you perform your work. The more control an employer exerts, the more likely someone should have been classified as an “employee.”

The misclassification rule is even more protective under California independent contractor law. In California, there are three different ways an independent contractor can prove they should have been classified as an “employee.” If the worker wins under any of the three, they are entitled to overtime pay, labor code penalties, and other benefits.

Exempt vs. Nonexempt Employees

Even if your employer classifies you as an “employee,” some employees are considered “exempt” from labor code protections, such as meal and rest breaks, overtime, expense reimbursement, and minimum wage. Employers may properly classify employees as “exempt” if they fall into one of the established exemptions, which include:

• Executive exemption
• Professional exemption
• Administrative exemption
• Outside sales exemption
• Computer exemption

Each exemption has its own requirements that, if not met, would mean that the employee has been misclassified. Follow the links to learn more, or speak to our employment attorneys.