Independent Contractors don't benefit from California Labor Laws

San Jose, CAPreeti Dave never got paid for the six months she moonlighted as an independent contractor.

"I want to let others know what I learned from this: be careful when you are promised a lot; read the contract and remember that you don't have the department of labor to protect you," she says. "I was so naïve".

"I found a job posting on Craig's List looking for software engineers to work from home. I met the owner of the company and he seemed very professional and amiable so I signed a contract and he gave me a copy. I worked evenings and weekends and logged over 600 hours, from August 2005 to February 2006. I worked with six other engineers, all working from their homes like me. We started programming and exchanged emails with each other about the work. And I also emailed my boss about when we would get paid.

He said that he would pay us in stock options - he gave me a document that said I would get one percent of the company, about 200,000 stocks at that time. I agreed, mainly because I thought my co-workers were doing the same; I thought they trusted this guy. In reality, they were all thinking the same as me! At the end of six months I confronted the boss and he said that I wasn't getting anything."

If a contract looks too good to be true, chances are it is.

"I was shocked because he acted very professionally all along. First, I tried to contact him about paying me weekends and nights. No reply. Then I told him I would ask co-workers what they were getting and he told me I couldn't ask them - it was against the law. When I found out that it wasn't against the law, I talked to Adam, one of my co-workers who had worked more than a year at this job. He sent me an email saying this guy took us for a ride, but Adam just let it go. He said it was because it was too much work for an independent contractor to prove, especially when you work at home, but it was possible to take the case to court.

I filed a complaint with the federal department of labor and they said if I had employee status they could pursue it but because I am an independent contractor they can't help. Unfortunately, I found out that the law does not protect independent contractors very well.

Next up, I went on the internet and filed a complaint with LawyersandSettlements.com. A lawyer contacted me and wanted to know if I had any proof. Yes, lots. My situation is now looking better: the law firm is optimistic in taking my case but the company is registered in Louisiana so it is going to take some time. But I do have a case. I hope this guy will be stopped especially because others are falling for it.

Before I started the job with him, I worked in a similar situation for another person who paid me immediately after I finished my project, but after this experience I realize that he could also have gotten away with non-payment. Thank goodness not everyone is a crook but this guy knew all along that he wasn't going to pay us.

After this ordeal, I certainly know more about the California labor law. One thing it has taught me: Unless I am paid up front, I won't work. "

Independent Contractors, be aware that companies generally hire independant contractors to avoid employer obligations under many state and federal laws.

For example:

• Reasonable accommodation and return to work obligations under disability laws do not apply.
  
  
• Anti-discrimination obligations to protected employee classes (e.g., age, race, sex, national origin, ancestry, disability, medical condition, sexual preference, religion, etc.) are not a concern (though independent contractors are protected under sexual harassment laws).
  
  
• No collective bargaining or union issues.
  
  
• No employee benefits to give, such as medical insurance, pension, stock option and other equity plans.
  
  
• No disability insurance, life insurance, sick pay and vacation pay.
  
  
• The worker is not part of the work force for workers' compensation insurance purposes.
  
  
• Leaves of absence, such as California Family Rights Act, Family and Medical Leave Act and pregnancy disability leave, are not required.
  
  
• Tax and trust fund obligations (e.g., income tax, unemployment insurance, state disability insurance, paid family leave, employment training tax, Social Security and Medicare) are of little concern.
  
  
• Unemployment insurance benefits are not owed.
  
  
• Wage and hour laws (e.g., minimum wage, overtime, rest periods, vacation pay on termination, etc.) do not apply.
  
  
• Plant closure and mass layoff notice laws are not a worry.
  
  
• Wrongful employment termination and related causes of action do not exist.

Here is a list of classification factors used by most courts and agencies to determine whether or not "independent contractor" is the right classification; the more factors that fit, the better the chances that "independent contractor" is the right classification.

1. The company has no right to control the manner and means of how the contractor accomplishes the results desired, regardless of whether that right is actually exercised. This factor is most important.
   
   
2. The contractor's work is not the company's primary work.
   
   
3. The contractor is in a distinct occupation or separate business.
   
   
4. The contractor's relationship is short-term.
   
   
5. The contractor decides where the work is to be done (usually the contractor's facility) and sets his or her own hours.
   
   
6. The contractor is paid by the job.
   
   
7. The contractor uses personal tools.
   
   

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8. The contractor cannot be terminated at-will.
   
   
9. The contractor is highly skilled, works without supervision of the company and uses initiative, judgment and foresight for success of the independent operation.
   
   
10. The contractor has the right to hire and terminate others.
    
    
11. The contractor does not have a company title or business card.
    
    
12. The contractor acts like a separate business (e.g., entity, contracts, invoices, leases, insurances, employees, etc.).
    
    
13. The parties believe they are creating an employer-employee or principal-independent contractor relationship.
    
    
14. The contractor has financial control of the business (i.e., significant investment in the business, opportunity for profit or loss, and pays own expenses).