What are the main differences between an independent contractor and an employee?
There are many important differences between an independent contractor and an employee. The way you are classified impacts how much you earn and what legal rights you have, among other aspects of employment.
Employees are typically entitled to health benefits, medical leave, unemployment, social security, Medicare, state disability and workers’ compensation. Non-exempt employees in California are also entitled to a minimum wage, overtime pay, meal and rest breaks. They have more protections under the law than independent contractors but sometimes less flexibility. Employers have control over their employees’ work schedules and working conditions and how they perform their tasks.
Independent contractors may have more freedom than traditional employees in terms of deciding when, where and how to do their jobs. They can take on multiple projects at the same time and accept work on a freelance basis. An employer might hire an independent contractor to work for the company, but that does not necessarily make the contractor an employee.
Independent contractors generally have their own workplace and equipment. Unlike employees, independent contractors are not eligible for minimum wage, overtime, workers’ compensation or protections under certain workplace safety and anti-discrimination laws.
In determining whether a worker is an employee or an independent contractor under California law, a key aspect for consideration is the degree of control a company has over the worker. The state uses the “ABC” test, which consists of three factors used to decide whether a worker should be classified as an independent contractor. The more control the hiring entity has, the greater the likelihood the worker should be classified as an employee.
The distinction between an employee and an independent contractor is not always clear. Many employers may try to take advantage of the ambiguity by incorrectly labeling a worker as an independent contractor.
Being misclassified as an independent contractor when you are an employee is a violation of your rights. For example, if you were misclassified, and you often worked over 8 hours per day or 40 hours per week but were not paid overtime, you could be owed a considerable amount of unpaid wages and penalties.
Other Unpaid Wage, Overtime and Commission FAQs:
- Am I entitled to meal breaks and rest breaks if I am working remotely?
- Are computer programmers and tech workers exempt from overtime?
- Can an employer disclose my immigration status if I file a claim for unpaid wages?
- Can I get fired for claiming overtime pay?
- Can my employer change my commission plan or withhold commissions?
- Can my employer fire me for filing a wage claim?
- Can salaried workers earn overtime in California?
- Do I still get overtime if I am a commissioned salesperson?
- Does my employer have to pay me for off-the-clock work?
- Does my employer have to reimburse me for work expenses?
- How can a lawyer help with my claim for unpaid wages?
- How can I protect myself from wage theft?
- How can I tell if I am an independent contractor?
- How do I file a claim for unpaid wages?
- How do I know if I am entitled to overtime pay?
- How do I know if my employer needs to pay me overtime?
- How is overtime pay calculated in California?
- How much time do I have to file a wage claim in California?
- How much time do I have to file an overtime claim?
- If I receive a salary, am I exempt from overtime?
- If my employment is terminated, is my employer still required to pay me my commissions?
- Is my employer allowed to deduct anything from my paycheck?
- Is my employer allowed to deduct tips from my paycheck?
- Is my employer allowed to withhold my final wages after firing me?
- Is my employer required to pay for my meal break and rest breaks?
- My employer is forcing me to work through meal breaks. What should I do?
- What are some examples of wage theft?
- What are the main differences between an independent contractor and an employee?
- What is an exempt and non-exempt employee?
- What is the minimum wage in California?
- What should I do if I suspect my employer is withholding wages?
- What should I do if my boss asks me to work off the clock?
- What types of damages can I get in a wage claim against my employer?