Determining whether you qualify for employee status

As an independent contractor in California, you do not get many of the benefits an employee enjoys.  Employers provide health insurance, workers’ compensation and healthcare coverage only to employees. While many people prefer the flexibility of a contractor, if you must adhere to the same rules and controls as an employee, you may be among the growing percentage of workers misclassified as a contractor.

According to the California Chamber of Commerce, misclassifying an employee as an independent contract potentially creates liability for employment taxes and penalties. An organization owes legal obligations to its employees, such as meeting wage and hour requirements.

ABC test

The ABC test helps determine whether a worker is an employee or an independent contractor.  However, if you meet all three of the following conditions, you meet the requirements for an independent contractor. The first is that you typically work as an independent contractor for other companies completing the same duties as those performed for the hiring organization. The second condition is that you are free from the direction and control of the hiring organization in performance and fact. The third condition is that you perform work outside the hiring organization’s regular business operations.

Employee indicators

Several conditions can indicate that you meet the requirements for an employee, such as the following:

• You receive hourly wages
• The company trained you
• You receive employee benefits
• The company supervises your duties
• You provide services integral to the organization’s business

Independent contractors often work with organizations for a short period. The more permanent your employment, the more likely you fit the requirements for an employee. You may qualify as an employee even if your position does not align with all the above indicators.

The distinction between an employee and an independent contractor is not always clear-cut. Misclassification occurs across all industries. However, construction, drivers, technology, janitorial and home care typically have higher rates of independent contractor misclassification. Understanding the law can help determine if your employer violates employment regulations.