Increasingly, employers in today’s economy are hiring what they call “independent contractors” rather than “employees” to work on their behalf. This is especially the case with younger workers who may be brought on for a specific project or period of time. In California, we see this quite often in the tech and creative worlds, and perhaps most notably with Uber, the car service that has labeled around 160,000 individual drivers as “independent contractors” in California alone over the past 7 years. The employers then pass on operating expenses, including payroll taxes, onto the workers. And they seek to shield themselves from employment laws that exist to protect employees, including workers’ compensation and unemployment insurance, by labeling themselves as “clients” or “brokers” rather than “employers.”
In many situations, the “independent contractor” is working for one company more or less exclusively, and the worker is dependent on that single company for his or her livelihood. So whenever the company ends the “independent contractor” relationship, it can be just as financially disruptive as being terminated by an employer.
And when the client makes the decision to end the independent contractor relationship in a way that seems suspect, you may have the question: Can I, as an independent contractor, sue for wrongful termination?
Possibly, Particularly If You Were Not Really an “Independent Contractor”
The first question to ask is if you were misclassified as an independent contractor. Many so-called “independent contractors” are really employees. What the parties call themselves does not control. California law presumes that any person rendering services for another is an employee. So even if your company called you an “independent contractor,” and even if had a written independent contractor agreement, the law may nevertheless treat you as an employee. This is what Uber learned after the California Labor Commissioner declared that an Uber driver was an employee.
If that was the case, then the client as your employer would be required to honor your employment rights as its employee, and may also be liable to you for unpaid wages, unreimbursed expenses, and other employment law violations.
California courts look at a number of factors in determining whether a party was misclassified as an independent contractor, including:
- Did the company control the manner in which you performed the work?
- Did you have a significant investment in the company’s business?
- Did the company supply the instrumentalities, tools, and the place for you to do the work?
- Were you restrained from seeking business opportunities with other companies?
- Was the work intended to continue indefinitely (as opposed to a specific period of time)?
If the answer to any of the above questions is yes, then there may be indeed have been an employer-employee relationship, and wrongful termination laws might apply. Keep in mind that the list above is not exhaustive.
If You Are Unsure If You Were an Independent Contractor or Employee, Contact Us to Learn More
It is to your benefit to be an employee. As an employee in California, your employer is required to provide you with certain protections under both federal and state law. In addition to requirements related to insurance and taxes, the employer-employee relationship also means that the employer cannot make employment decisions – including hiring, firing, demotion, etc. – that violate employment laws relating to discrimination and harassment.
For questions about wrongful termination, independent contractor status, or other employment law matters, contact the employment law attorneys at Sessions & Kimball LLP for a free consultation.