California law requires that workers be properly classified to ensure they receive the wages and protections they are entitled to. When employers misclassify employees as independent contractors or exempt from overtime, they often deprive workers of critical rights — including overtime pay, meal and rest breaks, reimbursement of business expenses, and wage statement protections.

Independent contractor misclassification occurs when a worker is labeled a contractor but, in practice, functions as an employee. Under California’s “ABC Test” (codified in Labor Code § 2775, following Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903), a worker is presumed to be an employee unless the hiring entity proves:
A) the worker is free from the control and direction of the hiring entity;
B) the work is outside the usual course of the hiring entity’s business; and
C) the worker is customarily engaged in an independently established trade or occupation.

If any part of this test is not met, the worker must be treated as an employee — entitled to overtime, breaks, reimbursement of expenses, and the protections of California’s wage and hour laws.

Exempt employee misclassification happens when an employee is wrongly categorized as exempt from overtime and other wage protections. To qualify as “exempt,” an employee must meet both (1) a duties test and (2) a salary basis test. Exemptions are narrowly defined and apply only to employees who primarily perform executive, administrative, or professional duties and earn a salary at least twice the state minimum wage for full-time work. Job titles alone do not determine exempt status — the actual day-to-day responsibilities do.

Misclassified workers are often required to work long hours without overtime pay, denied meal and rest breaks, and issued inaccurate wage statements. They may also lose access to unemployment insurance, workers’ compensation, and paid family leave benefits.

When misclassification occurs, California law provides powerful remedies: recovery of unpaid wages and overtime, meal and rest break premiums, interest, penalties, and attorney’s fees. In some cases, civil penalties under the Private Attorneys General Act (PAGA) may also apply.

At Levine Labor Law, we uncover misclassification schemes—whether labeled “contractor,” “manager,” or “salaried”—and fight to ensure California workers receive every protection the law promises.