San Diego Employee Misclassifications Attorney
Your Employee Classification Matters
Your employee status as exempt or non-exempt, or if you’re considered an independent contractor, absolutely matters when it comes to how you are compensated and treated at work. Employers may intentionally misclassify employees to save money by not paying overtime or for mileage and special equipment.
If you’re a misclassified employee in San Diego, AMartin Law can represent you in seeking fair compensation for your employer’s mistreatment. Contact us online or call (619) 268-6585 to receive a free consultation and find out how we can help you.
Independent Contractors vs. Employees
Many employers try to save money by misclassifying workers as “independent contractors” rather than employees. Their motivation for doing this is to avoid paying things such as workers' compensation insurance, payroll taxes, minimum wage or overtime pay, business expenses such as mileage on a vehicle or specialized equipment, and benefits such as health insurance and 401(k) contributions.
In contrast to employees, independent contractors are paid as if they are operating their own business, and they are responsible for paying both the employer and employee’s share of taxes. They are often not provided with employee benefits and are not guaranteed minimum and overtime wages nor are they protected by workers' compensation. Independent contractors are also not afforded the numerous other protections provided to employees under California law, such as meal and rest breaks.
Independent contractors can be nearly anyone. They are housekeepers, shuttle drivers, outside salespersons, and more. As long as they are generally not working full-time at one job or for one company for most of the week, these workers can be considered independent contractors.
Simply labeling a worker as an independent contractor does not make them one. Even if the worker signs a contract saying that they are an independent contractor, that doesn’t mean anything. To determine whether a worker is an independent contractor or an employee, California law requires the entire employment situation to be evaluated.
When evaluating the employment situation, several factors are considered, but no single factor is often responsible for determining whether or not someone can be classified as an independent contractor.
Some factors favoring that an independent contractor should be reclassified as an employee are:
- The employer controls how, when, and where the worker performs their job
- The worker operates in an occupation or business that is the same as the employer’s
- The worker’s tasks are part of the employer’s regular business
- The employer provides the worker with a workspace, equipment, materials, and tools to perform work
- The worker has only a minimum financial investment in equipment, materials, and tools required to do their work
- The work doesn’t require unique skills in a particular occupation
- The employer requires supervision over the worker
- The worker’s opportunity for profit or loss doesn’t depend upon their own managerial skills
- The relationship between the worker and employer isn’t limited to particular tasks that the worker was hired to perform
- The worker is paid hourly instead by the job
- The worker and employer don’t believe they are creating an employer-independent contractor relationship
Exempt & Non-Exempt Employee Status
Employees who are classified as “exempt” are not entitled to overtime pay. Most employees, however, should not be classified “exempt” and should be entitled to overtime pay, which is 1.5 times the regular pay rate when employees work between 8-12 hours a day – or more than 40 hours a week. When employees work more than 12 hours a day or on the seventh straight day during a workweek, they’re entitled to double their regular pay rate.
Exempt Employee Exceptions
Employers often avoid paying overtime by misclassifying employees as exempt. They accomplish this by giving employees a meaningless “management” or “supervisor” title and paying them a salary. The process for determining whether an employee can be classified as exempt, however, is more complicated.
Typically, an exempt employee is one of the following in a company:
- Computer professional
Employers usually use the executive exemption to misclassify managers, assistant managers, and supervisors. People who are granted this exemption are strictly limited to certain criteria, such as managing an entire enterprise, department, or subdivision. They regularly direct the work of two or more employees, and have the authority to hire and fire others (or, their recommendations to do either are given great weight).
People with an executive exemption also spend 50 percent or more of their work time on management duties, regularly exercise discretion and independent judgement, and earn a monthly salary of no less than two times the state minimum wage (approximately $2,880 per month)
The administration exemption is limited to employees who perform office or non-manual work directly related to management policies or business operations.
They regularly exercise discretion and independent judgement; assist executives, high-level administrators, and upper management; or perform specialized or technical work that requires special training, experience, or knowledge with only general supervision. Additionally, they spend more than 50 percent of their work time on administrative-type tasks and earn a monthly salary of no less than two times the state minimum wage. (In California, the monthly minimum wage for employers with more than 25 employees is approximately $2,253 as of January 1, 2020.)
Professional exemptions are limited to professionals who are licensed or certified by the State of California in law, medicine, dentistry, optometry, architecture, engineering, teaching, or accounting.
Professionals who qualify for this exemption are those who spend 50 percent or more of work time with the following duties:
- Work that requires specialized knowledge gained through advanced study
- Original and creative work in a recognized field of artistic endeavors, such as music, writing, theater, and graphic arts (as opposed to work by anyone with general knowledge or training)
- Work that is predominantly intellectual and varied in character (as opposed to routine mental, manual, mechanical, or physical work)
- Work that requires a high degree of discretion and independent judgment to be exercised
These professionals must also earn a monthly salary of no less than two times the state minimum wage.
This exemption does not apply to pharmacists practicing pharmacy or registered nurses engaged in nursing, unless they individually meet the requirements under the executive or administrative exemptions.
Outside vs. Inside Sales Exemption
The outside sales exemption is limited to employees who regularly spend more than 50 percent of their work time away from their employer’s place of business selling items or obtaining orders or contracts. It applies when employees aren’t using mail, telephones, or the Internet to make sales unless an in-person visit with a client was part of the sale.
This outside sales exemption also does not apply to employees who work from home. If employees work from home, they only qualify under this exemption if they spend more than 50 percent of their working time away from their residence selling items or obtaining orders or contracts.
The inside sales exemption is limited to employees who work in sales and earn at least 1.5 times the state’s minimum wage or earn more than half of their weekly income from commissions.
Computer Professional Exemption
The computer professional exemption is limited to professionals in the computer field who spend more than 50 percent of their work time on intellectual or creative tasks that require discretion and independent judgment.
This exemption is further limited to computer professionals who spend more than 50 percent of their work time on tasks that involve the following:
- Developing, designing, documenting, analyzing, testing, or modifying computer systems or programs
- Documenting, testing, creating, or modifying computer programs related to software design or hardware for operating systems
- Skillfully and proficiently applying highly specialized information to computer systems analysis, programming, and software engineering
These computer professionals must also be paid at least $46.55 per hour (as of January 1, 2020).
This exemption does not apply to computer professionals who:
- Are trainees or hold entry-level positions
- Have not attained the level of skill and expertise necessary to work independently and without close supervision
- Are computer operators, manufacturers, and repairers
- Are engineers, drafters, machinists, or other professionals who may be skilled in computer-aided design software, including CAD/CAM, but who are not in a computer systems analysis or programming occupation
- Write material for print, onscreen media, customers, subscribers, or visitors to computer-related media such as the World Wide Web or CD-ROMS. This type of material includes box labels, product descriptions, documentation, promotional material, setup and installation instructions, and other similar materials
- Create imagery for effect used in the motion picture, television, or theatrical industry