Q: TWO years ago, I signed up with an agency to work as a nursing assistant assigned to patients in private homes. Recently, the agency asked me to sign a document stating that I am an “independent contractor” and I was now going to be a “1099 worker.” I received a W-2 before this. I work 5-6 days per week, 12 hours per day, for the same patient every week. I’d like to remain on W-2. What is the effect on me if I sign this agreement?
A: If you sign that agreement, the agency will treat you as an independent contractor (IC), and not an employee. At the end of the fiscal year, the agency will issue you a 1099 and you will be responsible for all taxes. Independent contractors are not employees and do not have employee rights or protections. Below are the disadvantages of being an independent contractor:
– No right to minimum wage
– No right to overtime pay for working more than 8 hours per day or 40 hours per week
– No right to be reimbursed for business-related expenses
– No right to meal breaks and rest breaks during work
– No right to the employer’s share of the social security, unemployment and disability taxes (and you cannot collect these benefits if you are fired or laid off)
– No workers’ compensation protection if you get injured at work
– Not entitled to additional benefits such as sick pay, retirement and profit-sharing plans
– No protection from discrimination
– No protection from wrongful termination of employment
However, just because an employee signs an Independent Contractor agreement (and is issued a Form 1099 for taxes) does not mean he or she is correctly classified as one. The independent contractor status is determined by law, not by the parties’ agreement. California courts engage in a fact-centered analysis to determine the worker’s status. A worker is likely not an independent contactor if:
1. The employer has the right to control the manner and means of work performance
2. The employment relationship may be terminated at will, i.e., the worker can be fired
3. The worker is not engaged in an occupation or business distinct from the employer’s
4. The type of work done by the worker is usually done under the employer’s supervision
5. The worker is not required to have any advanced, professional, or artistic skill to perform the work
6. The employer provides the instrumentalities, tools and place of work
7. The worker has to perform the work personally and cannot hire others to do it for him/her
The most important of these factors is the employer’s right to control the worker’s manner and means of performing the job. If the employer has significant control over how the worker should do the work, directs the employee what tasks to accomplish and how to accomplish these tasks, then the worker is an employee, and classifying them as independent contractors is illegal misclassification.
Employees misclassified as ICs lose big time – in money and legal protection. Thus, workers classified as ICs should carefully examine the nature of their working relationship with their companies. If they are really employees, they are entitled to back wages, reimbursements for expenses, and the value of employment benefits such as health insurance, retirement or pension benefits.
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The Law Offices of C. Joe Sayas, Jr. welcomes inquiries about this topic. All inquiries are confidential and at no-cost. You can contact the office at (818) 291-0088 or visit www.joesayaslaw.com.
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C. Joe Sayas, Jr., Esq. is an experienced trial attorney who has successfully obtained significant recoveries for thousands of employees and consumers. He is named Top Labor & Employment Attorney in California by the Daily Journal, consistently Aselected as Super Lawyer by the Los Angeles Magazine, and is a member of the Million Dollar-Advocates Forum.