Misclassification Lawyers
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California Misclassification Lawyers
There are two main types of misclassification of non-exempt workers that can be made under California law.
First, a non-exempt employee is misclassified if they are treated as “exempt” (not subject to California’s overtime, meal and rest break, and other laws) when they are legally non-exempt. Typically “white collar” employees are exempt because they fall under an exemption for professional, administrative, or executive workers.
Second, an employee may be misclassified as an independent contractor when in fact they are legally an employee.
Also, an employer can incorrectly classify you as exempt from California’s overtime laws due to some very specific exemptions that exist for specific careers and jobs, such as the exemption applied to outside salespeople.
Misclassification of Non-Exempt Employee as “Exempt”
Most workers in California are “non-exempt” employees, meaning they must have their time tracked in order to accurately pay overtime, must be provided meal and rest breaks, and have other protections. Under California’s laws if an employee does not qualify to be exempted from overtime laws and protections, then they are classified as non-exempt.
Many employers believe that if they simply pay someone a salary, then they automatically become “exempt” and do not need to pay overtime, provide meal breaks or rest breaks, or provide any of the other protections non-exempt employees are required to receive. However, when an employer does this it typically results in many violations of California’s laws and keeps you from being paid what you are legally entitled to.
If you believe your employer has misclassified you as exempt, give our office a call at (626) 432-5422 or contact us today.
How to Know if You Are a Non-Exempt Employee or an Exempt Employee?
In general, California’s more restrictive laws make it much tougher for employers to establish that an employee is exempt. The “white-collar” exemptions apply to professional, administrative and executive employees. All of these exceptions to the rule work to relieve employers from having to provide overtime, meal breaks, rest breaks, and other protections to certain employees. All three categories of white-collar exemptions (professional, administrative, executive) have the following requirements which all must be met under Labor Code section 515(a):
The employee in question must be “primarily engaged in duties that meet the test of the exemption” (check relevant IWC order & see below); and
The employee must “customarily and regularly exercise discretion and independent judgment in performing those duties”; and
The employee must earn a monthly salary equivalent to no less than two times (2X) state’s minimum wage for full-time employment.
“Primarily Engaged in” means: The employee must spend more than one-half of his or her work time engaged in exempt work.
Executive Exemption:
For this exemption to apply, an employee must:
Have duties and responsibilities that “involve the management of the enterprise in which he/she is employed or of a customarily recognized department or subdivision thereof”; and
Customarily and regularly direct the work of at least two or more other employees; and
Have the power to hire and fire, or command power to suggest and recommend the hiring, firing, and promotion, or other change of status of an employee; and
“Customarily and regularly exercise discretion and independent judgment”; and
“Primarily engaged in duties which meet the test of exemption” (spends more than 50% of work time engaged in exempt work); and
Earn a monthly salary of no less than two times (2x) state minimum wage for full-time employment.
Professional Exemption:
This exemption applies to any employee who:
Is either:
(1) licensed or certified by the State of California and is primarily engaged in the practice of one or more of the following professions: medicine, dentistry, law, engineering, optometry, architecture, accounting, teaching; or
(2) Is primarily engaged in an occupation commonly recognized as a learned or artistic profession; and
Customarily and regularly exercises discretion and independent judgment in the performance of his or her duties; and
Earn a monthly salary of of no less than two times (2x) state minimum wage for full-time employment.
Administrative Exemption:
For the exemption to apply, an employee must:
Have duties and responsibilities that involve either:
(1) Performing office or non-manual work directly related to management policies or general business operations of the employer or the employer’s customers; or
(2) Performing functions in the administration of a school system, or educational establishment or institution, or of a department or subdivision of those, in work directly related to the academic instruction or training carried on in the system, establishment, or institution; and
“Customarily and regularly exercise discretion and independent judgment”; and
Be “Primarily engaged in duties which meet the test of exemption” (more than 50% of work time spent engaged in work considered exempt); and
Earn a monthly salary of of no less than two times (2x) state minimum wage for full-time employment; and
Who:
“[R]egularly and directly assist a proprietor or employee employed in a bona fide executive or administrative capacity; or
Work specialized or technical lines requiring special training, experience, or knowledge, under only general supervision; or
Execute tasks and special assignments under only general supervision.
Misclassification of an Employee as an Independent Contractor
In general, California law presumes a worker is in an employer-employee relationship if they work for an employer. It is the employer’s burden to prove that the presumed employee qualifies as an independent contractor.
In most situations, the “ABC Test” under the California Supreme Court case, Dynamex Operations West, Inc. v. Superior Court of Los Angeles applies to determine whether a worker is an employee or an independent contractor.
Under the “ABC Test,” a worker is only correctly classified as an independent contractor if:
(A) “the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact,”
(B) “the worker performs work that is outside the usual course of the hiring entity’s business”; and
(C) “that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.”
All three elements must be established by the hirer in order for the worker to truly be considered an independent contractor.
However, in certain situations the prior “Borello” test may still be applicable. This test relies upon multiple factors to make the determination whether someone is properly classified as an independent contractor, including whether the potential employer has all necessary control over the manner and means of accomplishing the result desired, although such control need not be direct, actually exercised or detailed. This factor, which is not dispositive, must be considered along with other factors, which include:
Whether the worker performing services holds themselves out as being engaged in an occupation or business distinct from that of the employer;
Whether the work is a regular or integral part of the employer’s business;
Whether the employer or the worker supplies the instrumentalities, tools, and the place for the worker doing the work;
Whether the worker has invested in the business, such as in the equipment or materials required by their task;
Whether the service provided requires a special skill;
The kind of occupation, and whether the work is usually done under the direction of the employer or by a specialist without supervision;
The worker’s opportunity for profit or loss depending on their managerial skill;
The length of time for which the services are to be performed;
The degree of permanence of the working relationship;
The method of payment, whether by time or by the job;
Whether the worker hires their own employees;
Whether the employer has a right to fire at will or whether a termination gives rise to an action for breach of contract; and
Whether or not the worker and the potential employer believe they are creating an employer-employee relationship (this may be relevant, but the legal determination of employment status is not based on whether the parties believe they have an employer-employee relationship).
Borello is referred to as a “multifactor” test because it requires consideration of all potentially relevant facts – no single factor controls the determination. Courts have emphasized different factors in the multifactor test depending on the circumstances.
It is important that if you are unsure whether you are properly classified as an independent contractor at work, that you contact an attorney as soon as you can or call us at (626) 432-5422.
Other Exemptions that Could be Improperly Applied
These Jobs are Exempted From Both Overtime & Minimum Wage Requirements:
Outside Salespersons: Overtime and minimum wage requirements do not apply to individuals (outside salespersons) who are eighteen years or older and who customarily and regularly work more than 50% of their work time away from their employer’s location of business selling tangible or intangible goods, or obtaining orders or contracts for products, services or use of facilities. (Wage Order Nos. 1–2001—16–2001, §2 (8 Cal Code Regs §§11010–11160, §2).
Computer Professionals: Employees that work in the computer software field and are primarily engaged in work that is creative or intellectual, which requires the exercise of discretion and independent judgment are exempt (subject to certain conditions being met). (Wage Order No. 1-2001).
Members of Employees’ Families: Parents, spouses, children, and legally adopted children of employers are also exempted from California wage laws. (See IWC Wage Orders; 8 Cal.C.Regs. § 11010 et seq.)
Sheepherders: Even sheepherder can be exempt. (8 Cal.C.Regs. § 11140).
Jobs That Are Exempt Only From Overtime
Employees Receiving Sales Commission: Certain individuals are exempt if they: (1.) work in the mercantile industry (Wage Order 7-2001) or professional, technical, clerical, mechanical or similar occupation (Wage Order (4-2001), (2.) selling property or services (3.) their earnings exceed one and one-half times the California minimum wage, and (4.) more than half of their compensation is derived from commission.
Motor Vehicle Drivers: Specific interstate truck drivers are exempted from California overtime. Even drivers who solely drive intrastate may be exempt if their deliveries are a continuation of an interstate journey or if they reasonably could be expected to be called on to make interstate runs. (Bell v. H.F. Cox, Inc. (2012) 209 CA4th 62, 62, 77-78).
Movie Projectionist: Pursuant to California Code of Regulations, Title 8, Section 11100, motion picture projectionists are exempt from overtime.
Private School Teachers: Teachers working in private schools and teaching kindergarten through grade 12 are exempt from overtime. This exemption does not apply, however, to any tutor, teaching assistant, instructional aide, student teacher, daycare provider, vocational instructor, or other similar employee. (Lab C §515.8).
If you believe your employment is misclassified, it is important that you speak with an attorney as soon as you can. Contact us or Call us at (626) 432-5422 for a free consultation.