In some businesses or organizations, some workers are not classified as employees. Instead, they are categorized as independent contractors. California employment laws offer more protection to employees than independent contractors or 1099 workers, who may receive protection from employment law, the WARN ACT and FEHA. However, you can take action if a job dismissal contravenes your contract terms, is discriminatory or retaliatory, or breaches the laid-down procedures. At Stop Unpaid Wages, we can identify instances of wrongful termination for 1099 independent contractors and build a solid claim to seek compensation.

California Wrongful Termination Definition

When your hiring company terminates you in contravention of your rights under the employment law, public policy, or employment agreement, you are entitled to lodge an unfair termination claim. However, the claim process is sophisticated because of the current employment statutes and proof requirements. One of these principles that governs the context of wrongful termination is the at-will statute.

At-Will Employment Statute

The general employment principle in California is at-will, giving the employer authority to dismiss you for any reason or stop you from working if the reason is not unlawful. The discretion given to employers by this principle makes it challenging to claim damages for a wrongful dismissal.

So, wrongful dismissal is a legal doctrine that takes effect when an employer, business, or company ends a worker’s contract in contravention of the public policy, existing employment statutes, or employment contract. The exceptions that apply to the principle are:

  • The dismissal amounts to contract breach

  • The dismissal is retaliation for the worker’s participation in a protected activity, like reporting sexual harassment or lodging a harassment claim.

  • A dismissal that contravenes public policy, like terminating a worker’s contract for declining to engage in criminal activity, serving in jury duty, or reporting hostile or hazardous work conditions.

Speak to your employment attorney to understand the at-will employment principles and their exceptions to help clarify that, as a 1099 worker, you fall under a distinct classification. Wrongful dismissal as an exception to the general principle of at-will employment does not apply to independent contractors unless specific legal protection is invoked or your classification as a 1099 worker is successfully challenged.

The Unique Nature of 1099 Independent Contractors

1099 workers are not employees per the majority of labor statutes. Additionally, many employment benefits employees enjoy, like meal and rest breaks, overtime, backtime, and eligibility for workers’ comp and unemployment insurance benefits, are unavailable for contractors.

The contractual terms govern the relationship between the hiring organization and the contractor. Therefore, the at-will principle, primary to worker termination, does not apply to independent contractors. Any disagreements about dismissal are evaluated through the contract between the 1099 worker and the employer or legal statutes that apply to 1099 workers.

The unique nature of a 1099 contractor relationship means disputes are governed by contract terms and applicable statutes, not at-will doctrine. The legal recourse of independent contractors must be anchored on contract violation, legal protections that specifically apply to 1099 workers, and successfully proving a negligent misclassification by the employer as a contractor when one is an employee to deny you employment benefits. If your hiring entity misclassifies you as a 1099 worker when you are an employee, you assume all costs. However, when terminated, you suffer the consequences an employee would experience in the same situation.

Therefore, when a wrong termination happens and you believe the employer negligently misclassified you as a contractor, you should talk to your employment law attorney to identify the misclassification to enable you to sue for wrongful termination as an employee. Distinguishing between an employee and a 1099 worker can be challenging. The features of an independent worker are:

  • You are involved in another business or business distinct from the hiring organization’s core business.

  • You have invested in the materials and equipment required to perform the assigned project

  • Your employer pays you per completed project and not for the time spent in the organization

  • You can provide the same services or products to other organizations while in contract with your hiring entity.

  • You can make a profit or a loss from the project depending on your managerial skills

  • You are free to perform your duties without the employer's supervision, as they do not control how you do your work.

  • There is a written contract between you and the hiring organization that classifies you as a 1099 worker.

  • You work on given periods and determine your work schedule

The right to end a 1099 worker’s contract is derived from the terms or legal provisions against discrimination. While you are outside of protection by labor statutes, successfully proving misclassification places you on the path of wrongful claim termination damages as an employee. Demonstrating misclassification is not just a pathway but a prerequisite to seeking reimbursement for the illegal dismissal.

Legal Ground for Filing Wrongful Termination Claims for Independent Contractors

The specific grounds on which you, a contractor, can pursue compensation from the hiring organization for wrongful dismissal are:

  1. Breach of Implied or Express Contractual Terms

The most prevalent and direct way of suing your hiring company for wrongful dismissal of a contractor is proving that the entity acted in violation of the existing implied or explicit contract. Unlike employees who enjoy focus and attention from employment law and labor statutes, 1099 workers enjoy minimal protection, and most laws do not apply to them. The relationship between the 1099 worker and the employer, and the terms of the relationship, are defined in the contract. The agreement usually stipulates:

  • The scope of the project or job to be performed

  • Responsibilities

  • The project duration

  • The expectations or objectives after the job

  • The grounds and terms for contract termination.

A breach of the contract happens when one of the parties to the agreement disregards or fails to perform their obligations against the implied or explicit requirements of the agreement. When an employer ends the contract against the specified terms, for instance, by firing you without the grounds provided, you can file a claim against them for violating the agreement.

Independent contractor agreements may be written or oral; implied terms may be recognized through conduct and communications by the conduct of the persons involved or their representation. When establishing a relationship with a hiring company, you sign a written agreement specifying all the terms, including responsibilities and the cause for termination. A written contract is beneficial because if an employer illegally terminates you, you can refer to the agreement to prove a violation. The entity can lawfully terminate you if the reasons for the dismissal are specified in the contract, like failure to deliver the objectives or expectations, stipulated notices, or breach of the terms of the deal.

During the termination, the employer must follow the outlined procedures, like exploring arbitration measures or steps to allow the independent worker to fix their mistakes before issuing a termination notice. The employer must also pay the agreed-upon amount in the contract upon termination.

When your hiring organization breaches these terms, you can bring a wrongful dismissal claim for violating contractual terms.

Contract violation is foundational for 1099 workers who wish to sue employers because it relies on the existing contract and not the complex employment statutes provided by various employment and labor statutes. All you need is your employment lawyer to prove a violation of your rights to receive compensation. However, the contract must be clear, comprehensive, and concise, as it establishes the grounds for assessing the legality of a dismissal. Before signing a contract, ensure it is not a non-compete so the company does not bar you from providing similar services to other entities, even though most of these contracts are unenforceable in California. Therefore, before signing a contract, have your employment lawyer review it and advise you on the appropriate action to avoid future regrets when an illegal termination happens.

  1. Workplace Discrimination

The California Fair Employment and Housing Act (FEHA) protects against discrimination against employees and independent contractors. FEHA enforces civil rights and forbids workplace discrimination on the grounds of protected characteristics like:

  • Age for workers 40 or older

  • Marital status

  • Sexual orientation

  • Gender

  • Gender expression

  • Military or veteran status

  • Sex, including pregnancy, breastfeeding, or childbirth

  • Race

  • Nationality

  • Physical or mental impairment

  • Nationality

  • Color

  • Genetic information

  • Stalking, domestic violence, or assault victim status

  • Religion or political affiliation

  • Ancestry

  • Medical condition

Additionally, FEHA prohibits harassment based on protected groups against independent workers, even in organizations with fewer than five employees.

Discrimination manifests in various ways in an organization, including:

  • Unfair treatment compared to other 1099 workers because of your protected characteristics

  • Harassment that creates a toxic or hostile work setting

  • Retaliation for participating in a protected legal action, like reporting a harassment incident or lodging a harassment claim.

When a hiring entity cancels your contract with discriminatory intent or behavior, you can pursue a wrongful termination lawsuit under FEHA violation by the employer. The statute directly protects 1099 workers and gives them a definite legal recourse to seek compensation from employers for wrongful dismissal. Further, the statute protects independent contractors from wrongful dismissal because of protected features.

  1. Retaliation By the Hiring Entity

It is not uncommon for hiring organizations to leave contracts with 1099 workers incomplete to make it easy for them to classify them as employees. Many contractors who discover they have been misclassified usually file unpaid wage lawsuits to seek compensation for overtime, meal, rest breaks, and backpay. Sometimes, when you report the misclassification or demand benefits denied to you because of the misclassification, an entity can retaliate through unfair dismissal.

Also, retaliation involves demotion, pay reduction, exclusion from specific jobs, or creating hostile work conditions that force a worker to quit voluntarily.

Protected lawful activities that can prompt your organization to retaliate are:

  • Declining to engage in illegal activities on behalf of the employer

  • Divulging information or reporting an unlawful activity by the organization to the police or relevant authorities for further inquiries.

  • Lodging a claim against a hiring company for unpaid or missed work benefits after a misclassification.

  • Complaining or reporting hazardous work conditions

While filing an unfair termination claim on the grounds of retaliation by the employer is more complex for independent workers than employees, some public policies and employment statutes still provide you with legal recourse. When you work for an organization and not the state as a contractor, you can claim the employer misclassified you as an employee, meaning that you are entitled to protection under labor laws from retaliation against whistleblowing. Besides, the retaliation by firing was in breach of public policy.

  1. Breach of Public Policy

Public policies are derived from provisions of the law or the constitution. It is public policy that an employer will not dismiss a worker for:

  • Declining to engage in unethical or unlawful conduct

  • Serving on a jury

  • Taking a family leave

  • Complaining about hazardous work conditions

If you cannot assert misclassification, you can cite breach of public policy or fundamental societal values by the employer.

  1. Unfair Constructive Termination

An employer can attempt to avoid a wrongful termination lawsuit by forcing you to voluntarily resign by deliberately creating harsh or hostile employment conditions, which is called unfair constructive termination. Therefore, you can lodge a claim against your hiring entity for wrongful constructive discharge if you can show:

  • The company knowingly created or caused the creation of hostile work settings through retaliation.

  • The entity lacked legal grounds for a legal termination, and ending your contract would have attracted wrongful termination accusations.

The elements or aspects of the claim include:

  • Your company created intolerable work conditions to force you to quit the job

  • A reasonable hiring entity in the same situation would have recognized that the intolerable condition would cause any employee in the same position to resign.

Because of the strict timelines, you should consult with an experienced employment attorney when filing these lawsuits. You have twelve months to lodge a claim under FEHA, and at most 24 months if the unfair dismissal contravenes your contract or fundamental public policy. You will have 36 months to lodge a claim if the wrongful constructive discharge is for whistleblowing. The clock starts to tick on the day of resignation. Do not stay too long under intolerable conditions because it implies the environment was not as aggravated as you claim.

  1. Breach of the Worker Adjustment and Retraining Notification (WARN) Act

Hiring organizations must notify workers of impending mass layoffs, company closure, or relocation within sixty days per the WARN Act requirements. Any termination against the Act is unlawful and gives you legitimate grounds for a claim.

Mass layoffs are any dismissals that affect at least fifty employees, while relocation is moving significant company operations to a location 100 or more miles away. Plant closure means ceasing the primary company operations, industrial or commercial. If the employer notifies you of the decision late, they violate the Act and should compensate you for the days not covered by the notice. However, the Act does not apply to the following employers:

  • Those with fewer than 75 employees

  • The layoffs are due to disaster or war

  • The job was temporary, and workers were aware

  • You are a temporary worker

  • The delay in the notice was due to the employer’s efforts to consolidate capital to prevent the closure.

Available Damages

Wrongful or unfair discharge can cause severe financial difficulties; hence, the need to seek compensation. The damages you will receive depend on the grounds for lodging the claim.

Contract Breach Damages

When you, a contractor, successfully demonstrate that an employer violated a contract through an unfair termination, the court awards you damages to restore your financial position had the contract not been unfairly terminated.

The court awards compensatory damages for the direct losses stemming from the unfair termination. You will receive expectation damages for the capital gain you scheduled at the end of the project. These include lost wages estimated based on fair market value and contractual terms. Compensatory damages can also be awarded as consequential damages for the indirect losses stemming from the wrongful termination.

Besides, the judge will award general damages for the losses stemming from the natural contravention of the contract.

Monetary damages are not sufficient to cover all your losses. Therefore, depending on the circumstances, you will receive equitable remedies like:

  • Termination of the original agreement and the creation of another one

  • Rewriting or adjusting the original contract

  • Compelling the breaching party to fulfill some of the obligations in the agreement

Discrimination and Retaliation Damages

If you successfully show the court that your termination was discriminatory or in retaliation for a protected activity, the judge will impose several remedies, such as:

  • Contract reinstatement

  • Back pay or reimbursement for lost earnings

  • General damages for losses incurred

  • Compensation for emotional distress

  • Punitive damages if you can show the employer acted maliciously, fraudulently, or oppressively

  • Attorney fees

Claims on these grounds attract non-economic damages like reimbursement for emotional distress and punitive damages. Therefore, you should consult your attorney to evaluate your case and determine if you can file under these claims for maximum compensation.

Misclassification Remedies

When the grounds for wrongful termination are misclassified, you can secure several remedies and damages. You will receive compensation for unpaid overtime, minimum wage, and missed rest and meal breaks.

Additionally, the court compensates you for missed employment benefits like health insurance and retirement contributions.

Again, the employer will pay you for operational costs incurred when you were misclassified as a contractor.

Other damages include:

  • Liquidated damages if you are classified as an exempt employee

  • Attorney’s fees

  • Interest on unpaid wages

Even though you can seek legal redress as a contractor or 1099 worker, the damages available are limited compared to those of a worker classified as an employee. Therefore, you should understand the available damages in your claim to set realistic expectations. The most comprehensive damages you will receive hinge on your successfully showing the hiring company misclassified you.

Navigating Unfair Termination

If you are a 1099 worker considering an unfair termination claim, you must document the events of the violation and collect evidence. Note down the dates of the violations, locations, parties involved, work-related communications, and your relationship with the employer.

Documentation will provide facts to prove the dismissal was unlawful. You can present paperwork like a work contract, disciplinary records, and performance reviews to show that the firing was unlawful. Informal recording of conversations with the employer can also be used when formal documents are unavailable. With solid evidence, the chances of a fair outcome are high.

Once you have the evidence, you should review your contract with the company. Apart from misclassification, many other wrongful dismissal claims for 1099 workers are based on contract violations. Therefore, you should review the contract meticulously after termination to identify any breaches of the contractual terms or termination clauses. If you cannot understand the clauses, your employment lawyer should interpret them. Further, the attorney will review these terms and determine if your termination was unlawful and whether there is solid evidence to lodge a claim against the organization.

When hiring a legal representative, ensure they understand California employment and labor statutes. An experienced and knowledgeable attorney knows the evidence you should gather for a strong claim. Besides, they are familiar with the expectations of the law and the consequences of various workplace violations.

Partner with an attorney familiar with claims like yours who has successfully represented independent workers before and secured maximum compensation. Such an attorney knows the everyday challenges they will encounter in the case and how to overcome them for a favorable verdict.

Find an Experienced Employment Attorney Near Me

California wrongful termination for 1099 independent contractors is highly nuanced and differs from employee unfair termination. Luckily, you can still pursue legal recourse by proving that you have been misclassified as a contractor, the employer has violated your contract, or FEHA. You need legal representation to navigate the complex process of suing your employer.

At Stop Unpaid Wages, we will evaluate your case to identify grounds for a claim, gather evidence, and file a solid lawsuit for maximum compensation. Call us at 424-781-8411 to discuss your case.