Employee Misclassification – When is it Wage Theft?

May 20, 2016

Last updated on November 17, 2023

Employee MisclassificationEmployee misclassification continues to cost workers their lawful wages. They may not receive their on-the-job benefits and are shorted earned wages. When employers intentionally misclassify workers it is considered wage theft.

Employee Misclassification: Independent Contractor

One way workers are misclassified is when they are improperly designated an Independent Contractor. They are paid a flat rate with no benefits. Independent contractors are not considered employees at all. However, to qualify as an independent contractor, a worker normally derives income from more than one employer, operates independently without an employer’s direction and control on a daily basis and often have their own private business entity that invoices the employer for whom they are providing services. If these factors are not present the worker may be considered an employee and receive the proper hourly pay including overtime and the required employee benefits. It is a fact-intensive inquiry.

Recently the California Labor Commissioner cited San Francisco-based American Airporter Shuttle, Inc., for misclassifying their employees as independent contractors. These employees were not paid their earned wages, including overtime, did not receive their proper meal or rest period breaks and were denied workers compensation and unemployment benefits. Airporter was ordered to pay $212,407 for Wage Theft (see news release “Labor Commissioner Orders San Francisco Shuttle Company to Pay Six Drivers $212,407 for Wage Theft“).

Employee Misclassification: Salaried Worker

Another way workers are misclassified is as salaried workers, or exempt from overtime. These workers are not paid the time and a half or double time wages for overtime as required by the law. Very often they are also denied a second meal break during shifts more than 10 hours. Workers classified as “non-exempt” are entitled to all of their hourly wages, including overtime wages, meal and rest breaks and in California accrued sick time.

Employers involved in misclassification schemes may be stealing earned wages from their employees. Workers who find themselves in these situations can contact an employment attorney and file a civil action against their employer for payment of correct wages, interest due on unpaid wages, penalties and premium wages for missed meal and rest period violations, and other damages related to incorrect wage statements and California Labor Code violations. Employment attorneys like Donahoo & Associates, PC provide confidential and free evaluations for workers who suspect wage theft by their employers.

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