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Understanding Employee Versus Contractor Status

You may have heard people state they are an independent contractor and not an employee, or your employer may try to classify you this way. What is the difference between the two?

The California Department of Industrial Relations addresses this question on their FAQ site. Classifying employees as an independent contractor gives the employer many benefits:

"Employers do not have to pay payroll taxes, the minimum wage or overtime, comply with other wage and hour law requirements such as providing meal periods and rest breaks, or reimburse their workers for business expenses incurred in performing their jobs. Additionally, employers do not have to cover independent contractors under workers' compensation insurance, and are not liable for payments under unemployment insurance, disability insurance, or social security."

There are a series of factors that are used to determine eligibility as an independent contractor. The law can be confusing as there are multiple government agencies involved, including the Internal Revenue Service. Each agency uses its own "test" to determine the employee status in the workplace.

The employer that tries to improperly classify an employee can meet with serious penalties.

How Do I Determine If My Position Has Been Properly Classified?

Each case is unique as there are variables such as the type of service provided, the location of the service, the length of the work, the skill involved in the work, whether or not you are paid by the job and limitations for hours and workload by the employer.

If you are not sure you are being classified properly, meeting with an employment law attorney can help to determine your best course of action. Contact us today.


Michael Thomas Lynch, Attorney at Law, serves clients in Auburn, Sacramento, Placer County and surrounding areas.


Michael Thomas Lynch, Attorney at Law
1223 High Street
Suite B6 
Auburn, CA 95603
Phone: 530-886-4006
Fax: 530-886-2829
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