Alternatives to Traditional Employment: Becoming an Independent Contractor

If you’re considering working as an independent contractor, or if you want to know more about the difference between an independent contractor and a traditional employee, you should read this section to understand your rights and responsibilities!

EMPLOYEES VS. INDEPENDENT CONTRACTORS—WHAT’s the DIFFERENCE?

In some cases, an employer may claim that they are hiring you as an independent contractor—NOT as a regular employee. Employers like to do this this because it means they have fewer responsibilities, and you have fewer rights, if you are an independent contractor—and often they will misclassify you in order to avoid following the law! For this reason, it’s important that you know the difference so that you don’t get exploited!

In general, you are an employee (NOT an independent contractor) if the following are true:

    The employer decides what tasks and assignments you do and directs your work;
    The employer controls how, where, and when you do your work;
    The employer supervises your work, and you’re required to follow their instructions;
    The employer trains you in how to do your work;
    The employer provides you with any necessary equipment, tools, and other materials;
    The work you do is a regular and necessary part of the employer’s business—not just a side activity;
    The employer sets your hours and pays you a set wage or salary;
    The employer has the right to fire you—and you have the right to quit—at any time.[2127]

In addition, the law generally presumes that you are an employee—and NOT an independent contractor—unless specific factors show otherwise.[2128]

IMPORTANT: Whether you are an employee or an independent contractor depends on the specific details of your work situation and your relationship with the employer—NOT on what the employer calls you!

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WHAT ARE MY RIGHTS AS AN EMPLOYEE (VS. AN INDEPENDENT CONTRACTOR)?

As an employee, you have the right to be paid minimum wage and overtime, receive meal periods and rest breaks, and get reimbursed by the employer for any work-related expenses (such as purchasing a required uniform). You also have the right to receive workers compensation insurance, unemployment insurance, disability insurance, and social security, and the employer is required withhold payroll taxes (which are taken out of your paycheck) and send these payments to the government.

WHAT ARE MY RESPONSIBILITIES AS AN INDEPENDENT CONTRACTOR (VS. an EMPLOYEE)?

On the other hand, if you are an independent contractor, you are NOT protected by minimum wage, overtime, and other labor laws. In addition, you have certain responsibilities—like filing self-employment taxes and reporting certain business information to the government—that you must follow. For more information about the legal responsibilities of an independent contractor, visit the EDD website on independent contractor reporting at http://www.edd.ca.gov/payroll_taxes/faq_-_california_independent_contractor_reporting.htm#Whohastoreport.

WHAT CAN I DO IF I THINK AN EMPLOYER HAS VIOLATED MY RIGHTS AS AN EMPLOYEE OR WRONGLY CLASSIFIED ME AS AN INDEPENDENT CONTRACTOR?

The California Division of Labor Standards Enforcement (DLSE) is the state agency responsible for enforcing your rights in the workplace. If you think an employer has violated your rights as an employee, wrongly classified you as an independent contractor, and/or for more information, you can contact your local DLSE office and speak with Deputy Labor Commissioner. To find a local DLSE office near you, go to http://www.dir.ca.gov/dlse/DistrictOffices.htm or call 1-844-LABOR-DIR (1-844-522-6734) for assistance.

For more information about your rights in the workplace, contact The Legal Aid Society—Employment Law Center’s Workers Rights Clinic at 415-864-8208 (San Francisco Bay Area) or 866-864-8208 (toll free in CA). Or contact a local legal aid or employment attorney in your area.

Helpful ResourcesFor more information on employees and independent contracts, try these helpful resources:

  1. 2127

    Cal. Lab. Code §§ 3351-53.

  2. 2128

    Cal. Lab. Code § 3357.