Under the wage orders, “to employ” means to “engage, suffer, or permit” someone to work for you. Sound confusing? It can be. The simplest approach is to assume that any person who does work for you that is part of your company’s business (who does some part of the work necessary to make the goods or provide the service that is the business of your company) is an employee rather than an independent contractor.
Erring on the side of treating workers as employees is a good way to guard against costly lawsuits. If you want to take a more nuanced approach, you’ll need to examine the California-specific test for determining if a worker is an employee or an independent contractor.
Wage/hour law can be complicated—particularly in California. Order the newly updated 2011 Edition of How To Comply with California Wage & Hour Law, and get up to speed.
You should keep in mind that simply labeling someone an independent contractor will not settle the issue, nor will having workers sign documents agreeing to be treated as independent contractors.
Likewise, paying someone on an Internal Revenue Service Form 1099 basis does not determine whether the person is an employee.
The IRS and the California Franchise Tax Board have their own tests for determining who is an employee for purposes of payroll taxes. With respect to wage and hour requirements, California uses the “Borello test”—which strongly favors a conclusion that workers are employees.
The test examines the total circumstances of the relationship between the business and the person performing the work, in light of 11 factors:
Don’t just take a stab in the dark as to whether a worker is an employee or an independent contractor—it could be the most expensive guess you ever make. Check out the fully updated 2011 Edition of How To Comply with California Wage & Hour Law and get it right the first time. Your satisfaction is 100% guaranteed.
1. Whether the person performing work is engaged in an occupation or business that is distinct from that of the company
2. Whether the work is part of the company’s regular business
3. Whether the company or the worker supplies the equipment, tools, and the place for the person doing the work
4. The worker’s financial investment in the equipment or materials required to perform the work
5. The skill required in the particular occupation
We’ll look at the remaining 6 factors tomorrow. We’ll also tell you about a won’t-want-to-be-without-it resource that will answer all of your tricky wage/hour questions—guaranteed.
Yesterday , we reviewed the first 5 factors of the "Borello test," which California courts
Yesterday , we reviewed the first 5 factors of the "Borello test," which California courts