Employee Misclassification

California pushed back harder than any state in the country. The ABC test, adopted by the California Supreme Court in the Dynamex decision and written into the Labor Code by AB 5, presumes you are an employee unless the company proves otherwise. And the exemption rules for salaried workers set a high bar most "managers in title only" positions cannot clear.

Labor Law PC represents workers, never companies. From our Santa Monica office we handle misclassification cases across Los Angeles: delivery and rideshare drivers, warehouse "contractors" staffing the logistics corridor to the ports, freelance production and post-production crews, salon workers renting chairs on terms that look a lot like employment, IT and marketing "consultants," and salaried assistant managers in retail and restaurants. If your label does not match your reality, call (877) 775-2267 for a free consultation.

The Two Kinds of Misclassification

1. Independent contractor (1099) misclassification

You get a 1099 instead of a W-2, no overtime, no breaks, no reimbursements, and both halves of the payroll tax bill. The question is not what your contract says; it is how the working relationship actually operates.

Signs you are really an employee:

• The company sets your schedule, routes, quotas, scripts, or dress code.
• You are supervised, evaluated, or subject to discipline like any employee.
• Your work is the company's core business (you drive for a delivery company, sew for a garment maker, style hair for a salon).
• You work for this one company, full time, indefinitely.
• The company provides the tools, systems, and training, and you could not realistically hire your own helpers or take your "business" elsewhere.

2. Exempt (salaried) misclassification

A salary is not the same as being exempt from overtime. Signs your "exempt" title is wrong:

• Your salary is below the legal minimum for exemption, which in California is generally at least twice the state minimum wage for full-time work. [VERIFY the current exempt salary threshold before quoting a figure]
• You are called a manager but spend most of your time on the floor doing the same tasks as the hourly staff you supposedly supervise.
• You have no real authority to hire, fire, or exercise independent judgment on significant matters.
• You are an "inside salesperson," coordinator, dispatcher, or analyst whose duties do not fit the administrative, executive, or professional exemptions.

California's ABC Test: The Strongest Worker Test in America

Under Labor Code section 2775, adopted through AB 5, a worker is presumed to be an employee unless the hiring entity proves all three of the following:

• A. The worker is free from the company's control and direction in performing the work, both under the contract and in fact;
• B. The work performed is outside the usual course of the company's business; and
• C. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature.

Prong B alone dooms most misclassification schemes: a delivery company cannot plausibly claim its drivers work outside its usual business. Some occupations are exempted from the ABC test by statute and analyzed under the older, multi-factor Borello test instead, and app-based drivers are subject to special rules under Proposition 22, so the analysis depends on your specific industry. That is exactly the kind of question a free consultation answers.

What misclassified workers can claim

Reclassification unlocks the entire California Labor Code, looking backward:

• Unpaid overtime and double time under section 510, including daily overtime after 8 hours.
• Minimum wage shortfalls with liquidated damages.
• Meal and rest break premiums under section 226.7, one hour of pay per day per violation type.
• Unreimbursed business expenses under section 2802: mileage, fuel, phone, tools, uniforms, supplies.
• Wage statement and recordkeeping penalties under section 226.
• Waiting time penalties of up to 30 days of wages if you have left the company.
• Civil penalties, including PAGA penalties, and willful misclassification penalties under Labor Code section 226.8.
• Interest and attorney's fees in many wage actions.

Wage claims generally reach back three years, and up to four for unpaid wages through the Unfair Competition Law; penalty claims can be shorter. Deadlines vary by claim and industry, so get specific advice early.

How We Build a Misclassification Case

1. Free consultation. We ask about control, scheduling, tools, supervision, and what the company's actual business is. Most workers know the answer by the end of the call.
2. Evidence gathering. Contracts, 1099s or pay stubs, app data, schedules, quota and route documents, emails showing direction and control, expense receipts.
3. Reclassification analysis. ABC test or Borello, plus the exemption duties test for salaried workers, applied to your real workweek.
4. Damages model. We reconstruct hours and expenses and stack every remedy the Labor Code provides.
5. Enforcement. Demand, Labor Commissioner, or litigation in Los Angeles courts. Misclassification is almost always systemic, so class and PAGA actions are frequently the strongest path.

Frequently Asked Questions

• I signed an independent contractor agreement. Doesn't that settle it?

  No. California law looks at the actual working relationship, not the label the company chose. Courts regularly reclassify workers who signed contractor agreements, because the test is about control and the nature of the business, not the paperwork.

• I have an LLC and invoice the company. Can I still be an employee?

  Possibly. Companies sometimes require workers to form entities precisely to disguise employment. If the company controls your work and you function like staff, the entity structure does not automatically defeat employee status.

• What is the difference between exempt and non-exempt?

  Non-exempt employees get overtime, meal and rest breaks, and detailed wage statement protections. Exempt employees do not, but only if they meet both a salary test (generally at least double the state minimum wage for full-time work) and a strict duties test. Title and salary alone are never enough.

• Will I owe back taxes if I am reclassified?

  Generally, reclassification shifts payroll tax burdens toward the employer, and misclassified workers may have overpaid self-employment taxes. We coordinate the wage case; a tax professional can address refund questions. Fear of taxes should not stop you from recovering wages.

• Can the company end my contract for raising this?

  Retaliation for asserting wage rights is unlawful whether the company calls you an employee or a contractor. If you are terminated after raising misclassification, that can add retaliation and wrongful termination claims with their own damages.

• Does AB 5 apply to gig app drivers?

  App-based rideshare and delivery drivers are governed by Proposition 22's special framework, which provides different protections. Other drivers, couriers, and logistics workers outside that framework are frequently covered by the ABC test. It is fact-specific; ask us about your platform and role.

Related Wage and Hour Claims

• Wage and Hour Overview: what reclassified employees are entitled to under California law.
• Unpaid Overtime: often the largest single item in a misclassification case.
• Meal and Rest Breaks: premium pay contractors were never given.
• Minimum Wage Violations: piece rates and flat fees that fall below the legal floor.

Your Label Might Be Costing You Thousands. Find Out Free.

Tell us how your work actually operates, and we will tell you what California law calls it, and what that may be worth. Call (877) 775-2267 or request a free case evaluation. No fees until we win.