Independent Contractors Lying In Wait… An Employment Law Perspective

From Drinker Biddle & Reath LLP and JDSupra— “Here is a common scenario.  An individual is engaged by a company as an independent contractor.  The individual may like to receive a pay check without withholding taken out and a 1099 at year end. The company may like saving costs that come with employees, such as overtime pay, timekeeping and meal periods for non-exempt employees, employer-side employment taxes, medical plan premiums, pension plan contributions, Workers Compensation premiums, and responsibility for anti-discrimination and other employee-protective laws.   

Then a big change happens.  For example, the company ends the relationship; the worker is seriously injured on the job; the worker suffers a major medical problem; or the worker simply files with the EDD for unemployment insurance.  At this point, the worker and government agencies are motivated to try to reclassify the worker as an employee to provide rights and recourse that contractors do not have.

In a recent matter we handled, in which only wage and hour issues arose, the client’s claim exposure was between 7 and 10 times the unpaid overtime wages allegedly owed to a misclassified contractor…..”

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