QUESTION: I am a registered nurse working for a nursing registry in California. The nursing registry provides temporary nursing services to hospitals and care facilities. I am not affiliated with any other nursing registry. I am considered an independent contractor by my employer and received a 1099 for the most recent tax year. According to my accountant, I am an employee and should receive a W-2. Does it matter whether I am classified as an independent contractor or an employee?
Answer. Yes, it does. Independent contractors are not employees and, therefore, do not have the same rights and protections that employees enjoy. Employees are entitled to the following rights guaranteed by the Labor Code and the Wage Orders:
1) the right to minimum wage
2) the right to overtime pay for working more than 8 hours per day or 40 hours per week
3) the right to the employer’s share of the social security, unemployment and disability taxes
4) workers’ compensation protection
5) additional benefits granted by employers to employees such as sick pay, retirement and profit-sharing plans
6) protection from discrimination
7) protection from wrongful termination of employment
Persons classified as independent contractors are not entitled to any of the above rights. In addition, they are not entitled to significant benefits provided by employers such as health insurance, pension plans, or sick and vacation leaves. It is to the worker’s advantage, therefore, that he or she be correctly treated as an employee.
Just because the worker receives a 1099 and has agreed to be treated as an independent contractor does not mean that the worker has been correctly classified as one. The independent contractor status is determined by law, not by the parties’ agreement.
How can a worker know that he or she has been correctly classified? Courts consider the following factors to determine whether a worker is an employee or independent contractor:
1. The employer’s right to control the manner and means of performance
2. Whether the employment relationship may be terminated at will
3. Whether the worker engages in an occupation or business distinct from the employer’s
4. Whether the type of work done by the worker is usually done under the employer’s supervision
5. The skill required to perform the work
6. Who provides the instrumentalities, tools and place of work
7. The length of time for the performance of the service
8. Method of payment, or whether payment for work is by time, piece, rate or job
9. Whether the worker may hire others
10. Whether the services are part of the employer’s regular business
11. Whether the parties believe they are creating an employment or independent contractor relationship
The most important factor is the employer’s right to control the worker’s manner and means of performing the job. If the employer has complete control over how the worker should do the work, directs the employee what tasks to accomplish and how to accomplish these tasks, then the worker is an employee and not an independent contractor.
Correctly classifying a worker as a true independent contractor or employee may make a big difference in terms of compensation and benefits for employees and their families. Those classified as independent contractors in the workplace would be smart to inquire from an experienced employment attorney to know what they are really entitled under the law.
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C. Joe Sayas, Jr., Esq. is an experienced trial attorney who has successfully obtained significant results, including several million dollar recoveries for consumers against insurance companies and big business. He is a member of the Million Dollar-Advocates Forum—a prestigious group of trial lawyers whose membership is limited to those who have demonstrated exceptional skill, experience and excellence in advocacy. He has been featured in the cover of Los Angeles Daily Journal’s Verdicts and Settlements for his professional accomplishments and recipient of numerous awards from community and media organizations. His litigation practice concentrates in the following areas: serious personal injuries, wrongful death, insurance claims, unfair business practices, wage and hour (overtime) litigation. You can visit his website at www.joesayas law.com or contact his office by telephone at (818) 291-0088.
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