With California's rising cost of living, you are entitled to earn every dollar you work for. Sadly, many employers violate employment laws by failing to pay overtime, denying workers rest breaks, misclassifying independent contractors, engaging in wrongful terminations, or withholding payments. These illegal actions cause substantial financial problems for employees and their families. However, you can file a wage claim against your employer to recover the unpaid wages. At Stop Unpaid Wages, we have experience in various service areas of employment law and can use the knowledge to help you claim unpaid wages.

Employee Misclassification as “Independent Contractors”

Workers fall under two categories: employees and independent contractors. Employees are classified as exempt and non-exempt. Non-exempt workers enjoy all the safeguards and privileges under the wage and hour statutes. In contrast, exempt workers enjoy some but not all protections under the wage and hour statute. Misclassifying employees as exempt instead of non-exempt means they miss several employment benefits. A common mistake, deliberate or unintentional, that employers make is to misclassify workers as exempt when they fall under the non-exempt group, denying them several employment benefits and protections like minimum wages or overtime pay. 

Also, employers willfully misclassify employees as independent contractors in 1099 misclassification or independent contractor misclassification. Independent contractors are not employees but self-employed parties contracted to provide services or work on a project. The work performed by contractors has become popular. Therefore, when you fall under this category, you should understand your rights by speaking to your employment attorney. Workers who are commonly misclassified as independent contractors are:

  • IT workers like software engineers or computer programmers
  • Transportation workers include delivery truck, bus, shuttle, big rig, and courier drivers.
  • Workers performing minimal managerial or administrative roles in the retail or food sector
  • On-call workers like firefighters, law enforcers on a street beat, and emergency medical responders (EMTs)

Many new statutes prohibiting the misclassification of employees as contractors have been enacted. One of them is Senate Bill 459, which was passed in 2011, discouraging employers from willfully or intentionally misclassifying workers as independent contractors. Intentional misclassification means an employer avoids your employment status by deliberately misclassifying the person as an independent contractor.

The bill enacted civil penalties for employers who deliberately misclassified workers to deny them their rightful wages. The penalties range from $5,000 to $15,000 per violation. The Labor and Work Development Agency (LWDA), which assesses the penalties, can increase them to $10,000–$25,000 per employment law violation if it identifies a misclassification pattern. The penalties are paid to LWDA. SB 459 further discourages employers from deducting or imposing fees on misclassified workers. California Labor Code 226.8 prohibits employees' willful and voluntary misclassification as independent contractors.

Nevertheless, the LWDA can reduce an employer’s penalties if they prove that the misclassification was accidental or unintentional and take the necessary measures to remedy the situation. After a misclassification, the law expects an employer to fix the problem by posting on the organization’s website about the breach of LC 226.8 and a change in the existing workplace policies to prevent similar misclassifications. Proving this will not remove the employer’s penalties but can compel LWDA to lower their penalties.

If you have been misclassified in California, your wage claim falls under the unpaid wages practice area, and our employment attorneys at Stop Unpaid Wages can help you recover the lost wages.

Independent Contractor vs Non-Exempt Employee

The classification differences between employees and contractors are in control and payment. A contractor is an individual in business for their benefit. They:

  • Offer services outside the scope of the company’s core objectives or business
  • Plan their work schedule
  • Work from the preferred location, whether at home or their independent business’s location
  • Offer services to multiple clients at a flat fee
  • Decided on when and how to perform the task
  • Finance their tools and equipment for the job
  • Incur expenses for the daily operations of the project

A client only suggests the approach and timeline for achieving the results, but the contractor has the final say.

For example, a construction company hires you to design a website at a flat rate. You perform the project from home and work with several other clients to deliver their websites. Under the circumstances, you are a contractor.

Conversely, an employee is an individual who only works for one business or employer and whose performance of duties the company controls. Employees perform responsibilities related to the primary or core objective of the company. Additionally, they perform their tasks in the company’s place of business and work per the employer’s schedule. Furthermore, employees receive instructions from the employer, undergo training funded by the company, can face disciplinary action, and are paid an hourly wage or salary. Besides, they conduct tasks as the employer requests and do not incur expenses in the company's daily operations. Usually, the employer trains workers and guides them in performing their duties.

For instance, you are working as an independent contractor, and your business has grown, compelling you to seek help. You hire another web developer from your business office from 9.00 am to 5.00 pm at an hourly rate of $20 per hour. In this situation, the extra help qualifies as an employee, not a contractor.

So, employers are tempted to misclassify their employees to deny them certain wages, like:

  • Overtime pay
  • Paying taxes for you
  • Providing employment benefits
  • Paying workers’ compensation
  • Contributing to unemployment

If you believe your employer has misclassified you, consult an experienced attorney to understand your situation, protect your rights, and file a lawsuit.

California LC 3353 defines an independent contractor as an individual providing services for a specified payment for a given result, and the employer or principal can control the work results but cannot dictate how the contractor achieves the result. The contractor controls most elements of the job, like rates, working hours, equipment to be utilized, and the location of the work.

LC 3357 differentiates between a contractor and an employee. Per the Code, any person who renders service to another but is not a contractor or not expressly excluded is an employee.

Federal statutes also differentiate contractors and employees based on protection levels and privileges provided in wage and hour statutes.

Another entity that can classify you as a contractor is the Internal Revenue Service (IRS). Unlike employees, contractors pay for the Medicare and Social Security taxes, which are equally split between employees and employers. Unlike employees who rely on equipment funded by the employer, contractors also source their equipment, like computers.

The tax forms of a contractor are different from those of employees. Regular workers complete Form W-2 while contractors fill out Form 8919 provided by the IRS.

Federal statutes differentiate contractors from regular employees based on control, where, when, and how services are rendered. The more authority you possess over achieving an outcome, the more likely you will be an independent contractor. If your employer has authority or control over all aspects of the services you are rendering, you are classified as an employee.

California statutes have more definite ways to help contractors demonstrate they are misclassified. One of these is the ABC test, which was adopted in 2018. It is the most reliable way of establishing your employment status. The test requires:

  1. The employer must demonstrate that you are free from their control and that they do not set your work hours, where to work, who to report to, and your rates.
  2. Your roles are outside the organization’s core objective or scope
  3. You run a separate business from the organization, or you are in a different business from the employer

You are an employee if your employer cannot prove the above test. So, if you have been misclassified, you can claim unpaid wages and receive part of the penalties the LWDA receives. Determining your job classification is difficult. You will require the assistance of an attorney to corroborate that there has been a misclassification and seek compensation.

Shift Pay

If your organization runs around the clock or 24/7, your employer should have a policy to compensate you for the premium for working in undesirable shifts, called shift pay. The pay is available because working these undesirable hours at night, on weekends, or on holidays can hurt the workers. The companies offering these shifts encourage employees to work by providing a premium wage.

Working these shifts is risky because you could develop chronic insomnia, fatigue, or sleepiness on the job, increasing the risk of accidents or errors that put the workers and the general public at risk of harm. An industry that uses these shifts is manufacturing. In manufacturing, employers encourage workers to always be alert, primarily when operating heavy machinery, to avoid fatal accidents. The wage is calculated on top of the salary, and the difference between it and the salary is called the shift differential.

The transport and medical industries also require employees to work shifts at night, on weekends, and holidays. The employees must stay alert when working these undesirable shifts because of the elevated risk of accidents or errors that could lead to loss of life and life-changing injuries.

The hazards in these industries are due to working undesirable shifts that deny workers enough sleep. Besides, the brain and body slow down during late-night hours and early morning, putting workers at risk. Therefore, those who work these shifts should demand shift differentials.

However, the benefits are not provided for under the wage and hour statutes at the federal and state levels, meaning the employer has no legal obligation to provide these benefits. The pay is an incentive for the undesirable work schedule.

Whether you will receive shift differentials depends on the agreement with your employer. If the agreement is verbal, the contract is implied, while if the deal is in writing, the contract is explicit. Shift pay has no legal grounds, meaning your unpaid wage claim will be based on the breach of the employment contract. Your attorney will argue that an explicit or implicit agreement exists between you, the employee, and the employer to receive a premium wage for working shifts. A violation of the employment contract goes against the Fair Labor Standards Act (FLSA), giving you the right to recover wages.

If you belong to a labor union, the union can utilize its collective bargaining authority to demand compensation for working a shift. You can file a claim whenever an employer does not pay these premium wages.

Your employer must always pay you at the minimum wage, which currently costs $16.50 per hour in California, no matter the number of workers a company employs. Besides, if you are a labor union member, they will have a minimum wage for the members, which your employer must honor. You can pursue compensation under federal and state law when suing your employer for unpaid shift differential. Consult with your attorney to identify the most favorable law to recover your shift differential if you had an agreement with the employer to pay, but they declined to do so. You can first lodge the claim with the Division of Labor Standards Enforcement (DLSE) or file a lawsuit in court.

Restroom Breaks

The state wage and labor statutes grant non-exempt employees a thirty-minute meal break if they work over five hours daily. Employees who work over ten hours are entitled to two of these breaks. A worker is entitled to a ten-minute rest break after every four hours if they work at least three and a half hours daily.

You can waive your rest break if you are working at least six hours. When you work ten hours, you can waive the second break if you used the first one. You do not need a rest break per the law if you work less than three hours. During this time, an employee should do whatever they want. The company should not interrupt your breaks and must relieve you of all duties; failure will result in penalties.

The law mandates that your employer should not put you on call during your restroom or meal break. Even if your employer requests it, you can politely decline. Such a request amounts to a violation of your right to rest or meal breaks. However, if you voluntarily work during the break, the company is not liable for your actions.

However, when the organization voluntarily denies you the break, you can sue them for violating the labor regulations. An employer is mandated to pay you if they deny you restroom breaks. You should earn an equivalent of your hourly rate whenever an employer denies you a lunch or rest break. The restrooms must be separate from the toilets and suitable for rest.

You should note that there is no provision in the law for employers to pay for rest or meal breaks. However, the law requires the employer to provide you with these breaks depending on your work hours. So, when the employer keeps you working during the break, the law assumes you are working, meaning you are entitled to compensation.

Backpay or Back Time

Sometimes, an employee completes assigned work but receives an undercalculated or miscalculated pay. It is an unpaid wage; the difference is that it is determined after you establish that an employer violated your rights. It is the difference between what the employer paid and what they should have paid.

For instance, your employer owes you for a completed project after they miscalculated your pay. The DLSE can recalculate the unpaid wages and notify you of the figure you should demand from your employer as back time or backpay.

The FLSA provides two ways of seeking back pay. However, you need legal counsel in these situations because of the complicated employment laws and administrative processes, even if the case does not go to court. The Wage and Hour Division (WHD) oversees payment with the help of the California Labor Department. 

The labor department can lodge a lawsuit on your behalf or a class action if many plaintiffs demand back pay from the same employer. Alternatively, you can lodge a lawsuit against your employer for back pay and liquidated damages, like attorney fees and court fees incurred because of the employer's breach of your employment contract.

Also, LC 1194 allows you to seek compensation for back time through DLSE. The common backpay stems from employer violations that lead to miscalculation or undercalculation of wages. The violations are:

  • Overtime violations
  • Off-the-clock work
  • Unpaid reimbursements
  • Unpaid sick leave or days
  • Misclassification as exempt leading to loss of employment benefits
  • Breach of minimum wage requirements
  • Unpaid restroom and meal break
  • Illegal payroll deductions

The timeline for bringing your unpaid wage claim depends on the situation, but it is usually 36 months. If the timeline provided by law lapses, you relinquish the right to seek compensation. When the contract is implicit, the timeline is two years or four years for explicit agreements.

Overtime

Non-exempt workers working above eight hours daily, forty hours a week, and at least six days a week are entitled to overtime pay. The payment compensates employees for working beyond their workday or week.

LC 510 demands that non-exempt employees receive one and a half pay for extra hours past eight. If you work twelve hours daily, your overtime pay should double your hourly rate.

Also, you should receive overtime pay if your employer does not stop you from working additional hours or authorize you to work additional hours.

The overtime pay exceeds the standard hourly rate because you sacrifice your brakes to work long hours. Also, paying time and a half or double the standard hourly rate encourages employers to hire more than have the same employees work excess hours.

You are entitled to overtime pay, and if your company fails to pay, you can sue them to recover the unpaid wages. Whether your employer engaged in theft or did not understand the law, you are entitled to claim back time for the overtime. Consult an experienced unpaid wages attorney to help build a strong lawsuit for maximum compensation. If the lawsuit is successful, you will receive payment for the unpaid overtime wages denied by the company, interest on the amount owed, and liquidated damages like attorney fees and court charges.

Wrongful Termination and Retaliation

California employs the at-will doctrine codified under LC 2292, giving employers the right to hire and fire workers at will or when necessary without justification for their actions. However, some exceptions apply to this doctrine. Retaliation is not covered under the statute, making it illegal to terminate an employee in retaliation or due to discrimination because of gender, race, age, or medical illness. An employer can also illegally terminate you for taking leave protected by law, like military or jury duty.

Other times, because firing you in retaliation or due to discrimination can attract a wrongful discharge suit, many employers intentionally create a toxic work environment targeting you so that you can quit. This is called constructive termination or discharge. If you can show that the company willfully created intolerable work settings or allowed a hostile work environment to continue, you should receive damages for wrongful termination.

However, the employer will not be liable for the constructive discharge if you knew of the toxic work environment before taking the job, but you still took it.

Another statute prohibiting wrongful termination is LC 98.6. Per the code, it is unlawful for a company to terminate an employee because of whistleblowing.

If you believe your termination is unlawful, speak with an unpaid wages attorney to build a solid case and seek compensation.

Find an Experienced Unpaid Wage Attorney Near Me

Federal and state employment statutes protect all workers regardless of their immigration status. However, these laws are complex and can contradict each other. Therefore, when recovering your unpaid wages, you want to partner with an attorney who understands these laws. Stop Unpaid Wages provides various services to clients seeking representation in different employment law practice areas. Call us today at 424-781-8411 to build a solid claim and improve your chances of recovering unpaid wages in California.