You show up to work every day, follow a set schedule, use company equipment, and answer to a supervisor. Yet when tax season arrives, you discover you have been classified as a “1099 employee” rather than a traditional employee. Many workers throughout California find themselves in this situation without fully understanding what it means.
If you believe you have been treated like an employee while being classified as an independent contractor, Employment Rights Lawyers, APC can help you understand your rights. Knowing the difference between a properly classified independent contractor and a misclassified employee is often the first step toward determining whether you may have a valid claim.
What is a 1099 Employee?
The term “1099 employee” is commonly used to describe a worker who receives a Form 1099 for tax purposes rather than a W-2. Legally speaking, however, a 1099 worker is generally considered an independent contractor, not an employee.
Independent contractors are typically in business for themselves rather than working as part of a company’s regular workforce. They often control how, when, and where their work is performed, provide services to multiple clients or customers, supply their tools or equipment, and operate independently from the company that hires them. In many cases, they can also accept or decline projects and determine the methods for completing their work.
By contrast, employees are generally subject to an employer’s direction and control. Employees may also be entitled to a range of legal protections and benefits that independent contractors do not receive, including meal and rest breaks, overtime pay, reimbursement of certain business expenses, and other wage-and-hour protections under California law.
Because of widespread concerns about worker misclassification, California law now presumes that many workers are employees unless an employer can prove otherwise.
The 3-Part Test to Qualify as a 1099 Employee
California uses a three-part test to determine whether a worker may properly be classified as an independent contractor. In most situations, the employer bears the burden of proving that all three parts of the test are satisfied. If the employer cannot establish even one of the required elements, the worker is generally classified as a W-2 employee rather than a 1099 employee.
The Worker Is Free From the Employer’s Control and Direction
A true independent contractor generally controls how the work is completed. If your employer dictates your schedule, closely supervises your work, requires attendance at meetings, or controls the details of your daily duties, this factor may weigh in favor of employee status. The more control an employer exercises over your work, the more difficult it becomes to justify an independent contractor classification.
The Work Is Outside the Employer’s Usual Course of Business
An independent contractor typically performs work that is different from the company’s primary business activities. For example, a bakery hiring an outside plumber to repair a sink may be hiring an independent contractor. However, if the bakery classifies its bakers as independent contractors, that classification may be difficult to justify, given that baking is central to the company’s operations.
The Worker Operates an Independent Business
A legitimate independent contractor is usually engaged in an independently established trade, occupation, or business. This may include maintaining a separate business entity, advertising services to the public, serving multiple clients, or otherwise operating as an independent business owner. If you work exclusively for one company and depend on it for your livelihood, this factor may support your employee status.
Have You Been Misclassified as a 1099 Employee?
Some employers classify workers as independent contractors because doing so can reduce labor costs and avoid certain payroll obligations. However, an employer’s preference does not determine whether a worker is legally an independent contractor.
If you were improperly classified as a 1099 worker when you should have been treated as a W-2 employee, you may be entitled to compensation and workplace protections, including:
- Unpaid overtime wages
- Missed meal and rest break compensation
- Reimbursement of qualifying business expenses
- Payroll tax contributions required by law
- Additional wage-and-hour protections available to employees
- Other damages or penalties that may apply under California law
Every situation is unique, and not every workplace dispute results in a legally viable claim. However, if you worked under an employer’s direction and control while being classified as an independent contractor, it may be worth having your situation reviewed.
Contact Us for a Free (and Confidential) Consultation
If you believe you were improperly classified as a 1099 worker in Los Angeles or elsewhere in California, Employment Rights Lawyers, APC can evaluate your case and determine whether you may have a valid claim. Our team of attorneys focuses exclusively on employment law and is committed to protecting workers’ rights. Contact Employment Rights Lawyers, APC for a free and confidential consultation to discuss your potential misclassification claim.
