Posted on April 22nd, 2021
Find a complete transcript of this video below
What’s up fellow entrepreneurs. It’s John Fagerholm again today. I want to talk about treating employees as independent contractors, but first remember as always I’m a lawyer, but I’m not your lawyer. So please seek competent legal representation for your specific problem or legal question.
There used to be lots of room to argue whether someone is an employee or an independent contractor, but over the years, that room has been considerably diminished by the laws that have been passed in California. In this video, I’m not going to discuss the difference between an employee or an independent contractor, because I’ve done that topic several times over, uh, over the years.
Instead, I want to talk about the risks with misclassification. So there are very few persons who would be considered independent contractors in California today in light of AB five legislation that was passed in January of 2020.
Uh, if an independent contractor does not meet the requirements of a, a baby five or does not fit an exclusion to AB five, they are an employee and there’s not anything that will change that. So even if the employee wants to be an independent contractor, the classification benefits them and you have it in writing.
It’ll still not save you from a misclassification lawsuit. So let’s talk about the risks and misclassification claim in itself does not carry much of a penalty. The problem with misclassification is that it opens up the door to several other claims.
So once there’s a misclassification claim, since there typically is not a need to track hours or breaks, uh, an employee will claim, they worked however many hours of overtime without getting paid and that they never received their breaks.
Since the employer is required to track those hours and breaks, the employee will have a legitimate claim that could cost thousands of dollars in attorney’s fees, whatever the judgment could potentially be. Um, and all of the, the other penetrated penalties. So just don’t do it. It’s not worth the risk. Well, that’s all I have for this video. So until next time be productive.
