What Does it Mean if an Employee is Misclassified?

An Irvine employment attorney at Brown & Charbonneau, LLP can provide legal help to employers in making sure they understand their obligations when hiring workers. One of the most important things for employers to be aware of is the rules for employee classification. You want to ensure that the worker you hire is classified properly so you can comply with all labor laws related to the type of worker you have brought onboard. 

Our firm can evaluate the position for which you are hiring and help you to determine what rules apply to the specific relationship that you will have with that particular worker. We can also provide representation to employees who believe they may have been classified improperly and suffered financial loss because of it. To find out more about how an Irvine employment attorney at our firm can help you, give us a call today.

Understanding Employee Misclassification

Workers get different kinds of benefits depending upon how they are categorized in terms of their relationship with their employer. For example, a worker could be considered either an employee or an independent contractor. If a worker is considered to be an employee, the worker could either be considered exempt — which means not entitled to overtime benefits — or not exempt, which means eligible to receive overtime pay.

Employers often willfully categorize workers incorrectly in order to save on labor costs. For example, if an employer classifies a worker as an independent contractor, the employer does not have to pay a portion of the workers’ Social Security and Medicare taxes — which employers are required to do for employees. An employer also does not have to pay for workers’ compensation insurance, unemployment insurance, or any other benefits for an independent contractor that would need to be provided for an employee.

While this saves employers a lot of money — as long as they do not get caught — it is costly for workers to be misclassified because they miss out on worker protections and benefits that an employee receives. Workers can take action and pursue legal remedies if they believe they have been incorrectly classified.

The government may also investigate employers to identify instances of misclassification and take appropriate action. As the Department of Labor explains, misclassification is “one of the most serious problems facing affected workers, employers and the entire economy.” Misclassification is taken seriously and, when it is discovered, there are grave financial consequences for employers who failed to follow the rules regarding the correct characterization of staff members.

Employers can also save money by misclassifying workers as exempt, again as long as they do not get caught doing this. Workers who are not exempt are entitled to receive overtime pay in California after they have worked more than 40 hours in a week or after they have worked more than eight hours during the course of a day. Overtime pay is at least time-and-a-half, and sometimes is double time if a worker exceeds a certain number of hours.

Obviously, it can be costly for employers to pay a lot of overtime to workers. To avoid having to pay overtime, employers may give an employee a salary and treat the worker as exempt, rather than paying an hourly wage. The problem is, only certain workers are supposed to be considered exempt salaried workers who are not entitled to overtime. The California Department of Industrial Relations indicates that workers are supposed to be exempt only if they meet certain criteria, such as being considered an outside sales person, or an administrative employee or a professional employee.

If an employer classifies a worker as exempt when the worker should not be, the worker could pursue a claim for back overtime that he was owed. Regulatory action could also be taken against the employer. Substantial financial consequences can result, so employers should make sure they understand what the rules are before trying to avoid paying overtime to workers.

Getting Help from an Irvine Employment Attorney

An employment attorney at Brown & Charbonneau, LLP will work closely with you to make sure your company does not face serious legal and financial consequences for the misclassification of workers. We can also help you to take action if you are an employee who has been misclassified and thus not received overtime or benefits to which you were entitled. To find out more about how our firm can help, give us a call at (866)237-8129 or contact us online today.