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socrateaser, Lawyer
Category: California Employment Law
Satisfied Customers: 37830
Experience:  Retired (mostly)
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Hi. I worked as an independent contractor for a large magazine

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Hi. I worked as an independent contractor for a large magazine for 5 years before becoming staff in 2009. I was laid off in Feb. 2013. Even though my former boss would like to hire me back as an independent contractor I am being told that I have to be off of payroll for a year before they will allow me to work again as an IC. My employer is in CA but the parent company is in New York, and apparently this also means I cannot work for any of the 130 other magazines as an IC during that time as well. Is there any way around this? And is this even legal?

Cal. Bus. & Prof. Code 16600 provides that all noncompete clauses are void. So, while your most recent employer can refuse to rehire you, it cannot prevent you from working for another employer, as long as you are employed while residing in California.

Please let me know if I can be of further assistance.
Customer: replied 3 years ago.

I am actually trying to see about being hired back as an independent contractor, not as an employee. In other words, how long must an employer wait before hiring a former employee back as an independent contractor?

There is no law whatsoever concerning this issue. It's entirely up to the employer to decide if it wants to rehire.

The problem for the employer is that by rehiring an employee as an independent contractor, the employer risks being determined by the California Employment Development Department (EDD) and the IRS as being a "misclassified employee," which means that the employer is attempting to avoid payroll taxes, which has huge fines associated with the misclassification.

Many employers will refuse to hire an employee as an IC for one year afterwards due to this legal difficulty. The one year delay has absolutely no legal basis. It's merely an arbitrary time period, intended to create sufficient space to try to avoid the misclassification risk.

Hope this helps.
Customer: replied 3 years ago.

Would my becoming an LLC help to avoid the misclassification?

Anything that demonstrates you have an investment in your own business could be used to help prove that you are not an employee.

The problem for the putative employer is that neither the EDD nor IRS cares about the "form" of any relationship. The issue is the "substance."

This worksheet from the EDD can be used to determine if your relationship is IC or employee (DE-38). The more factors that weigh against employment, the less risk for the employer. Ultimately, the decision to retain your services is the employer's to make. You cannot force the issue. You would have to convince the employer's HR department that you are not a risk of being misclassified as an employee.

Note: Thee EDD rules are actually more restrictive than the IRS rules. So, if you satisfy the EDD worksheet factors, then you will satisfy the IRS factors. But, not necessarily the reverse. You could be found to be an employee by the EDD while being deemed an IC by the IRS.

Hope this helps.
socrateaser and other California Employment Law Specialists are ready to help you
Customer: replied 3 years ago.

Thank you very much for your answers! This has been extremely helpful.

You're welcome.

If you need to contact me again, please open a new Q&A, put my user id at the beginning of your question ("To Socrateaser"), and the system will send me an alert.

PS. No need to reply. Thanks and best wishes!

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