Why Independent Contractors Should be W-2 Employees

If you are an independent contractor, you probably should be a w-2 employee. It’s really that simple. Why this matters is that as an employee, you receive overtime pay (time and a half for hours worked over 8 in a day or 40 in a week), and meal and rest breaks. You’re also eligible for benefits. But, as an independent contractor, you don’t get these things.

Therefore, employers save money by calling you an “independent contractor” not an employee. Before 2018, employers could largely get away with this because the standard for determining whether one was an independent contractor was a complex, eight factor test with plenty of “grey area” that made litigation to establish employee status a tricky proposition. But, in 2018, the California Supreme Court changed that. In a case called Dynamex Operations West v. Superior Court of Los Angeles, the Court instituted a simple three factor test to determine whether one should be classified as an independent contractor or an employee. What’s more, it is now the employer/company that has to show that the three factors apply, not the employee challenging the classification.

The three factors are:

1) that the worker is free from the control and direction of the company in performing his work;

2) that the work being performed is outside the usual course of the company’s business; and

3) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the company.

Think about how difficult it is for an employer to show all three of those factors. To show that their worker is an independent contractor, they have to show that they aren’t even directing the person’s work, that the work being performed isn’t even their typical business, and that the worker has their own business going on on the side. If you are functioning anything like a typical employee of a company, it’s safe to say that you are not supposed to be an independent contractor under the new test.

For this reason, we invite all independent contractors to contact us to review whether they should be classified as w-2 employees (rather than 1099 contractors) under the new test. You might be surprised at the amount of backpay and break penalty pay you may be due. Simply contacting us for a classification review is free of charge and obligation to file a lawsuit or make any other steps. It’s a good idea just to be aware of your proper status in the workplace.

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