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August 16, 2010
Independent Contractors and Employees in Your Organization

Dan Obuhanych discuss independent contractors and employees in a BLR webinar entitled ‘High-Tech Workers: Who’s Entitled to Overtime and Who’s Not; Avoid the Top 5 Most Common Mistakes’. He explains the difference between independent contractors and employees in an organization. Misclassification of employees and independent contractors can have a significant impact for the company in the form of wage and hour law and other laws. These laws generally protect employees but not independent contractors. Hence, a worker who is classified as an independent contractor is not entitled to any of the protection from these laws. Dan also provided the following information regarding independent contractors and employees:

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  • Proper classification of workers as ‘employees’ and not ‘independent contractors’ is important because non-exempt ‘employees’ are entitled to minimum wage, overtime, meal periods and rest breaks
  • In the eyes of the law, an employer may be liable regardless of whether the wrongful classification was intentional or inadvertent
  • There is audit risk from many agencies if employer has misclassified
  • The agency presumes that worker is an employee, but may be ‘rebuttable presumption’, i.e. the employer must establish independent contractor applying multi-factor test
  • Issues can arise where there is existence of written agreement is not conclusive or the issuance of a 1099 tax form rather than a W2 tax form

Dan Ko Obuhanych, Esq., is an attorney in the Mountain View, California office of law firm Fenwick & West, LLP ( His litigation practice focuses on labor and employment law, litigating wage and hour suits, unfair labor practice claims, discrimination/retaliation lawsuits, grievance/arbitration matters, and EEOC/DFEH charges.

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