Providing labor for monetary benefits is the most common type of agreement in today’s economic world. Many employees and 1099 independent contractors form transactional relationships with the parties they work for to ensure they receive fair compensation, including overtime. Failure to receive your benefits can negatively affect you, including a significantly reduced source of wages. Therefore, partnering with a workers' compensation attorney is beneficial, as you will receive the required legal assistance to protect you from exploitation.
At The Workers Compensation Lawyer Law Firm, we dedicate our services to ensuring you receive the full compensatory amount required for the work or skills you provide. Our team of attorneys has a wealth of experience in labor law to help you identify your employer’s shortcomings so that you can demand rightful compensation for your work. Any 1099 independent contractor dealing with overtime payment issues in Los Angeles, California, can contact us for further assistance.
Understanding Different Work Agreements
Parties enter different agreements to provide and receive work, meaning that you will fall into a specific compensation category. Learning to distinguish employment contracts from an independent contractor agreements is essential to helping you recover damages for unpaid overtime.
Therefore, consulting a workers' compensation attorney should be a priority to help you understand the best options when pursuing legal action. The first and most common type of work agreement is an employment contract.
As an employee, your role is to work for your employer under a specified set of rules that determine your work hours and compensation. You will also have minimal control over handling your work, as you will have received specific instructions from your employer to comply with.
On the other hand, an independent contractor also enters an agreement to provide services in exchange for monetary compensation. You will have more control over how you work, but you will still need to deliver results to the party you sign an agreement with. Additionally, you have the freedom to determine if you will take on other projects with similar demands, depending on your ability to multitask.
These two types of work agreements provide varying compensatory terms, including compensation for overtime work. As a result, you also want to learn additional information about how these payments work to help you determine whether you can expect a court order in your favor.
Overtime Payment Requirements
Overtime provisions are applicable in California through the Fair Labor Standards Act, which aims to protect employees from exploitation by employers under various guises. Among them are inconsistencies with overtime payment, depending on the employee's work hours.
Usually, all employers should pay their employees for all the hours they work in a day. The law provides that the standard working time for an employee is eight hours a day for five days, adding up to a forty-hour week.
However, work demands may require employees to work additional hours beyond the stipulated duration. This translates to overtime and entitles you to claim compensation for the extra hours you spend. The standard overtime pay rate should be one and a half times more than the usual salary you receive, as you will have spent personal time working.
Since overtime requirements impose additional financial responsibility on your employer, some employing parties may find fraudulent ways to exempt you from claiming the overtime benefits. This is because independent contracts cannot claim the payments, as they have the freedom to set their working hours and determine how to execute the work.
As a result, your employer may have wrongfully classified you as an independent contractor to avoid making extra payments. If unsure of your work status, you want to consult your attorney on the differences between the two main types of agreements.
The Difference Between Independent Contractors and Employees
Signing a work contract does not necessarily mean you are an employee, nor do you immediately become an independent contractor. You want to have a deeper analysis of the routine and environment you work in to ensure you fall within the appropriate category and receive benefits for your work contributions.
The differences between an employee and an independent contractor mainly depend on the type of control you have over your workflow, as well as whether you can work with other parties simultaneously.
Different tests have developed over the years through case law and practice, so the court can follow a reliable and predictable process in establishing your work status. In doing so, you will have clarity on the entitlements to help you recover for overtime compensation.
Tests Applied to Establish Employment Status
Upon submitting your claims to court, the presiding judge may apply two main tests to determine whether you are an employee or a 1099 independent contractor. As mentioned above, finding clarity for your case is crucial because independent contractors face exemptions for overtime payments.
Before applying the different tests, the judge may ask whether you use a 1099 form to file tax returns. This is a straightforward approach to establish if you are an independent contractor because the forms only apply to them.
However, you may submit to the court that your employer fraudulently classified you as an independent contractor, giving you no choice but to file tax returns using the form. Therefore, you can request additional analysis to determine whether you fit an employee’s description for better chances of receiving compensation.
The two main tests applicable in establishing employment status are:
The Control Test
The Internal Revenue Service(IRS) continuously applies the control test to establish whether parties in a work contract are employees or independent contractors. The basis lies in an employer's everyday practice of exercising considerable control over their employee. On the other hand, an independent contractor will work on their premises as long as they deliver on the assigned project.
Since the scope of control can be quite broad, the court may limit itself to assessing specific factors. For example, the presiding judge can check the type of agreement you signed to establish if the terms resemble an employment contract.
This will be apparent if the payment terms are monthly and your work hours are limited to a week. Based on the information, your employer already exercises some control over you, and the judge is more likely to classify your case as an employment matter.
Moreover, the presiding judge may also inquire about how frequently your employer directs your work routine. This includes checking if the employer can send you different assignments within working hours and if you are to report to them afterward.
Additionally, the skills you apply when working can be essential in determining whether you are an employee. Usually, employers contract other parties with specialized skills to work as their employees, as they may not have the same experience.
Most employing parties also offer to pay for additional skill-developing training to help their employees improve. Thus, a lasting relationship that culminates in your employer investing time and resources in you will also signify an existing employment contract.
The judge applying a control test will also check the payment system applicable to you, including any overtime agreements. Typical employment contracts have employees receive their salary every end of the month, while independent contractors can receive payment upon completing their projects. If your deal is in writing, the judge will have a smoother time referring to specific clauses that can establish the type of payment process and, ultimately, whether you are an employee.
Economic Reality Test
Alternatively, an economic reality test may apply to establish an employment status based on the type of investment you have made into your work. This test combines elements of control and dependency between an employer and employee to determine if an existing agreement comprises an employment contract or independent contractor terms.
Among the various considerations that the judge may make include whether you risk suffering loss and your ability to gain profits from your work. Usually, employees expect a steady salary despite the employer's profits or losses.
On the other hand, independent contractors can analyze whether the projects they take on will be profitable. For example, if you receive two offers as a 1099 contractor, you can choose the more lucrative offer to help you secure profits. Hence, the judge will use the circumstances in question to determine your status.
Additionally, if you have purchased or used your money in any other way to access work equipment, you could fall within the independent contractor category. Most employers will provide the necessary equipment to help employees work, mainly if they operate in an office.
For example, your employer should provide a computer, stationery, and sanitary resources to help you work effectively and continuously throughout the day. You will also have an obligation to take care of the resources and use them responsibly as an employee to promote sustainability in the workplace.
Economic reality tests further apply to determine your dependency level on your employer. For example, you will have to wait until the end of the month to receive your salary under an employment contract. Similarly, employees must ask for time off and await approval, while independent contractors can plan their schedules and avoid working at inconvenient hours.
Moreover, the permanence or lack thereof of your work relationship is a significant factor that helps distinguish between an employment and an independent contract. Usually, the court will request information regarding specific work clauses and determine whether the relationship will remain permanent.
Elements That Help in Test Analysis
Apart from the mentioned pointers for the judge to consider when distinguishing an employment contract from an independent contractor, they also need factors to justify their final determination. An employer opposing your position as their employee may raise some grounds to prove that you are an independent contractor. Therefore, your attorney should consider various grounds to support your position and help you rightfully claim overtime compensation.
Some crucial elements to consider include:
Whether Your Employer Applies Oversight In Your Work
An employer with direct influence over your work will require you to apply specific functions and deliver the assignment within a stipulated timeline. Moreover, they may request progress updates to ensure you meet their expectations.
These situations often depict an employee relationship, unlike an independent contractor. This is because independent contractors exercise more control and creative freedom to approach the task. Although the contracting party may issue work briefs, the contractor will apply them as they deem fit.
If You Own a Business that Provides Services
Owning a business means you work for your profit through providing services. Most independent contractors fall within this category, as they manage their marketing, tax returns, and work management.
Conversely, employees do not have to worry about profit margins or losses, provided they meet their work requirements. The only exceptions for employees will be if they work in a financial field emphasizing the need to close a sale for profit.
How Your Schedule Looks When Working
Moreover, the independence in creating your work schedule is more familiar with independent contractors because their terms allow flexibility. Nonetheless, the contracting party may provide a timeline by which you ought to present your project. Despite this, you will work on your schedule, meaning you do not have to clock in daily.
On the other hand, employees should follow all work regulations requiring them to clock in and out at a specific time. Moreover, your break time hours are strictly regulated, and you will only receive time off after your employer approves it. Due to this, you work under your employer’s control more as an employee than an independent contractor.
Payment Methods Applicable for the Work You Did
Unlike the monthly salary payments available to employees, independent contractors receive compensation after each project. Therefore, if the contracting party you work with formulates a monthly payment system, you can invoke your claims as an employee. This is justified because your work terms resemble an employment contract despite your employer insisting on independent assignments.
However, if the monthly payment system is developed as a standard practice between you and your contracting party, proving your position may be more difficult. They may rely on the written contract to show that your terms are provided for payment after every project. Thus, your attorney will be responsible for proving that you receive monthly compensation and changing your status to an employee.
Whether You Receive Any Benefits Apart from Monetary Compensation
Additionally, you should note that employees receive additional benefits on top of their monetary compensation. Most companies will provide medical insurance covers and invite their employees to purchase company equity at subsidized rates. Moreover, your employer will provide a retirement scheme by deducting a small percentage of your salary and saving it for retirement.
Independent contractors do not receive any benefits, as each agreement is contract-based. Moreover, since you are free to enter any other contract as an independent party, you cannot rely on one client to provide additional benefits unless they expressly agree.
Your Ability to Delegate Work
Employees are less likely to delegate their work to others, as their job descriptions mandate them to perform specific actions. The delegation would therefore make you redundant as an employee. However, independent contractors can delegate tasks to other parties like their subcontractors or employees. They do this to improve the contracting party's efficiency in completing projects on time. Hence, the court is keen to establish whether you have the flexibility to delegate tasks.
Whether You Can Market Your Skills Openly
As an employee, your skills and work apply to your current employer only, as most employment companies will require you to sign a non-competition agreement. As a result, you cannot market tour skills openly unless you leave your current employment position.
On the other hand, independent contractors can advertise their skills openly, as they can take on multiple tasks or projects at once. Hence, the court may inquire more about your ability to work on different projects to establish your employment status for compensatory purposes.
Filing a Lawsuit Against Your Employer
Having established your right to receive overtime compensation, you can pursue legal action against your employer. This only applies if you can prove that your employer wrongfully classified you as an independent contractor to avoid taking on extra responsibility to meet your financial requirements.
As a result, your workers' compensation attorney should find a solid basis for your case by debunking the possible doubts regarding your employment status. Afterward, they will present your position regarding the missed overtime payments to establish the link between your claims and the employer’s non-performance.
Although producing strong evidence to support your case is advisable, sometimes you may lack the requisite documents to show your position. Nevertheless, you should not worry about your inability to produce crucial documents because your employer is under obligation to preserve all employment-related information.
If the party claims that they regarded you as an independent contractor and did not store your documents, you can request the court to take note of the circumstances. Doing so will be helpful when the judge assesses the weight of your evidence, as they can apply a lenient consideration to your case.
If you are successful, you can expect the court to award you monetary compensation that covers all the missed overtime payments. Your employer or the party you formerly contracted to work with should deposit the expected amount within the time frame that the court makes available. If not, they may face additional repercussions, including punitive orders from the court.
The Statute of Limitations
While you have the right to pursue legal action for missed overtime labor payments, you must remember that the law provides a statute of limitations. Hence, you can only file your lawsuit within the established timeframe or risk forfeiting your access to legal redress.
The statute of limitations in California allows up to three years for an aggrieved party to sue their employer for compensation. Hence, you want to consult your workers' compensation attorney to help you prepare and file your case on time for a better chance of receiving your desired outcome.
In extreme cases, the court may excuse a matter filed out of time. However, you must show that your failure to meet the recommended deadline is reasonable. For example, if you suffered from a severe medical condition that reduced your mobility, you can provide proof of the circumstances.
These details will help justify your position and may increase your chances of receiving an exemption. Despite this, you should note that the presiding judge decides whether to accept your time extension request.
Maintaining Your Work Contract After Filing the Lawsuit
Once your lawsuit claims are successful, your employer has to meet their obligations to repay you for all missed overtime payments. Naturally, you may worry about the nature of your employment relationship after suing your employer, as most parties may turn hostile.
However, the law mandates employers to retain your position and reabsorb you back to work despite your lawsuit against them. The orders help achieve restitution so that you do not have to worry about finding a new job.
Independent contractors also have the right to receive compensation and proceed with the agreed project after a lawsuit, provided they had not completed the work. Moreover, you should be keener on how the party you are in contract with reacts to ensure they do not impose unfair terms on you as you try to complete the project.
Contact a Workers Compensation Attorney Near Me
When you or a loved one suspects that you face exploitation through unreleased overtime payments, you can seek legal redress for the issue. However, you will need to establish whether you fall within the employment status or if you are a 1099 independent contractor. The information is crucial to help you take the following steps in pursuing legal action and securing monetary compensation. Working with a competent and experienced attorney is among the best strategies when suing your attorney, so you want to select a reliable team.
With The Workers Compensation Lawyer Law Firm, you will receive excellent legal services aimed at helping you address the overtime compensation problems you encountered. Our involvement in your case will help you present your matter and position to a labor court on your behalf. If you require legal assistance regarding workers' compensation in Los Angeles, California, contact us at 424-501-9228.