Why misclassification may lead to underpayment of worker wages
  1. Home
  2.  » 
  3. Uncategorized
  4.  » Why misclassification may lead to underpayment of worker wages

Why misclassification may lead to underpayment of worker wages

On Behalf of | Jun 6, 2024 | Uncategorized

Workers accepting new jobs often focus on the title that they now hold or the base salary that a company offers. Details of an employment arrangement may not seem important initially. As a result, workers may unintentionally accept certain terms that put them at risk of employment law violations, including wage violations.

For example, if the company intends to hire someone as an independent contractor, they might accept that new classification with few questions. While they may work like an employee, the company gets to claim that they are a self-employed professional. That arrangement takes many costs of hiring workers and passes them back to the professional.

The company does not have to contribute toward unemployment coverage or workers’ compensation on behalf of an independent contractor. In some cases, an independent contractor classification could even lead to overt wage rule violations. How may companies violate wage laws if they misclassify an employee as an independent contractor?

Avoiding overtime obligations

The federal government has clear rules about when overtime pay is necessary. California has expanded on those rules to make overtime pay necessary in more scenarios. Self-employed professionals theoretically set their own schedules and make their own employment arrangements, so there is no overtime pay obligation if a company calls someone an independent contractor. Businesses could have workers scheduled for seven-day work weeks without a break or working 60 hours without overtime pay due to misclassification.

Bypassing minimum wage rules

There is a minimum hourly wage that companies generally need to provide their workers to remain compliant with the law. They can ignore those obligations if they classify an employee as an independent contractor. By requiring that a worker put in a significant amount of time while paying them a fixed amount of money, companies can push the hourly compensation for independent contractors well below the minimum wage standard. They can then claim that the independent contractor is responsible for their own scheduling and underpayment.

If someone who is treated like an employee gets paid like an independent contractor, they may not receive the full wages that they deserve for the time that they have worked. Realizing that misclassification can lead to wage violations can help employees stand up for themselves against this common form of company misconduct.