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Patrick, Esq.
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I have a disgruntled contractor. She claims she was acting

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I have a disgruntled contractor. She claims she was acting as an employee, but clearly she wasn't. She was the one that worked on more projects than asked to. She was asked to work less as I don't have the $ until I have patients in my new rehab. facility. It is still in the process of starting it up, so there is nothing regularly yet expected. There is a lot to do, but I have never told anyone how to do their job, when, or where. I am not on site, so have no idea about their usual. I just get their invoices to pay them ez 2 weeks. I have made it clear re: ind. cont. vs. employee, and plan on employing the people who will need to be there regularly etc. when I in fact have patients there to care for. This employee is threatening a law suit, also to report me to the labor board. I say, fine, I have done nothing wrong. But an attorney has said usually when this goes to anything legal, they find in favor of the agent/employee, since it is hard to prove. All the other agents I have working there can verify how I have presented it to all of them. They have no ? about the status. I am not sure how hard to fight back. What do you advise? Thanks, XXXXX XXXXX Powers
Submitted: 5 years ago.
Category: California Employment Law
Expert:  Patrick, Esq. replied 5 years ago.
Hello and thank you for entrusting me to answer your question.

You are putting yourself in a precarious position by continuing to employ workers as independent contractors and not employees.

Foremost, California's Department of Labor Standards Enforcement will start with the presumption that a worker is an employee--NOT and independent contractor. (Labor Code Section 3357) This is a rebuttable presumption however, and the Court's actual determination of whether a worker is an employee or independent contractor depends upon a number of factors, all of which must be considered, and none of which by itself is controlling.

For most matters, the DLSE will apply the "economic realities" test that the California Supreme Court adopted in S. G. Borello & Sons, Inc. v Dept. of Industrial Relations (1989) 48 Cal.3d 341. The most significant factor that S. G. Borello & Sons considers is whether the person to whom service is rendered (the employer or principal) has control or the right to control the worker both as to the work done and the manner and means in which it is performed. Additional factors that may be considered depending on the issue involved are:

1. Whether the person performing services is engaged in an occupation or business distinct from that of the principal;
2. Whether or not the work is a part of the regular business of the principal or alleged employer;
3. Whether the principal or the worker supplies the instrumentalities, tools, and the place for the person doing the work;
4. The alleged employee’s investment in the equipment or materials required by his or her task or his or her employment of helpers;
5. Whether the service rendered requires a special skill;
6. The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision;
7. The alleged employee’s opportunity for profit or loss depending on his or her managerial skill;
8. The length of time for which the services are to be performed;
9. The degree of permanence of the working relationship;
10. The method of payment, whether by time or by the job; and
11. Whether or not the parties believe they are creating an employer-employee relationship may have some bearing on the question, but is not determinative since this is a question of law based on objective tests.

Even where there is an absence of control over work details, courts may find an employer-employee relationship if (1) the principal retains pervasive control over the operation as a whole, (2) the worker’s duties are an integral part of the operation, and (3) the nature of the work makes detailed control unnecessary. (Yellow Cab Cooperative v. Workers Compensation Appeals Board (1991) 226 Cal.App.3d 1288)

Other points to remember in determining whether a worker is an employee or independent contractor are that the existence of a written agreement claiming to establish an independent contractor relationship is NOT determinative (Borello, 349), and the fact that a worker is issued a 1099 form rather than a W-2 form is also not determinative with respect to independent contractor status. (Toyota Motor Sales v. Superior Court (1990) 220 Cal.App.3d 864, 877)

By keeping your workers as IC's, an employer risks being fined for not carrying UE insurance and workers' comp insurance, plus other fines. Please consider the above carefully in deciding how to proceed with your business. Good luck.

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Finally, the information that I have provided is not legal advice. I am not acting as your attorney and my answer does not establish an attorney-client relationship between us. I encourage you to consult with a local attorney in regard to legal matters.

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