Contractor With a Manager? Signs You May Be Misclassified Under California Law

If you’re classified as an independent contractor but have a supervisor directing your work, you might be misclassified under California law. This misclassification can cost you thousands in lost benefits, overtime pay, and legal protections. Understanding your true employment status is crucial for protecting your rights in the workplace.

Why Proper Classification Matters in California

California has some of the strongest worker protection laws in the nation. When employers incorrectly label employees as independent contractors, workers lose access to critical rights and benefits, including:

• Minimum wage guarantees
• Overtime pay
• Meal and rest breaks
• Sick leave
• Workers’ compensation coverage
• Unemployment insurance
• Protection from discrimination and harassment
• Employer contributions to Social Security and Medicare taxes

Misclassification isn’t just harmful to workers—it’s illegal. Under California Labor Code section 226.8, California employers who misclassify employees face significant penalties, including civil penalties of $5,000 to $25,000 per violation for willful misclassification.

The ABC Test: California’s Standard for Employment Classification

In 2018, the California Supreme Court established the “ABC test” in the landmark Dynamex decision, which was later codified into law through Assembly Bill 5 (AB 5). Under this test, workers are presumed to be employees unless the hiring entity can prove all three of the following conditions:

A. Freedom from Control and Direction

The worker is free from the control and direction of the hiring entity in connection with performing the work, both under the contract and in fact.

B. Work Outside the Usual Course of Business

The worker performs work that is outside the usual course of the hiring entity’s business.

C. Independent Trade, Occupation, or Business

The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

If your employer cannot prove ALL THREE of these conditions, you should be classified as an employee, not an independent contractor.

Having a Manager or Supervisor: The Control Factor

The first prong of the ABC test—freedom from control and direction—is particularly relevant if you have a manager or supervisor. Having someone who:

• Assigns your tasks
• Sets your schedule
• Monitors your work
• Provides instructions on how to perform your job
• Requires you to attend meetings
• Evaluates your performance
• Has authority to discipline you

Strongly suggests you are under the control and direction of the hiring entity. This level of supervision is typical in an employer-employee relationship, not an independent contractor arrangement.

True independent contractors generally:

• Decide when and how they complete their work
• Use their own methods without detailed instructions
• Work without regular supervision
• Can accept or decline individual projects
• Often work for multiple clients

10 Warning Signs You’re Misclassified as a Contractor

Beyond having a manager, here are additional red flags that suggest you may be misclassified:

1. You Work Exclusively for One Company

True independent contractors typically maintain multiple clients. If you work solely for one company over an extended period, especially if they restrict you from working elsewhere, this suggests an employment relationship.

2. You Use Company Equipment and Resources

Independent contractors generally provide their own tools, equipment, and workspace. If your “client” provides these items, you may actually be an employee.

3. You Receive Training from the Company

Employees receive training on how to perform their work according to company standards. Independent contractors are hired for their existing expertise and typically determine their own methods.

4. You Work Set Hours at a Company Location

If you’re required to work specific hours at the company’s location, this indicates employer control consistent with employment status.

5. You’re Integrated into the Company’s Core Business

If your work is central to what the company does—like a delivery driver for a delivery service or a programmer for a software company—you likely fail the “outside the usual course of business” prong of the ABC test.

6. You’re Paid an Hourly or Weekly Rate

Independent contractors typically charge by the project or deliverable, not by time worked. Regular hourly, weekly, or monthly payment resembles a salary or wage structure.

7. Your Work Relationship Has No End Date

Independent contractors work on specific projects with clear end points. Open-ended work arrangements suggest employment.

8. You Must Follow Detailed Company Procedures

Having to adhere to company policies, procedures, or handbooks indicates control consistent with employment.

9. You Cannot Hire Your Own Assistants

True independent contractors can hire, manage, and pay their own assistants without company approval.

10. You Must Personally Perform the Work

If the company requires you specifically to perform the work rather than allowing you to send a substitute, this suggests an employment relationship.

Common Myths About Independent Contractor Status

Many workers remain misclassified because they believe common misconceptions about what determines contractor status:

MYTH: “I signed an independent contractor agreement, so I’m a contractor.”
FACT: Your classification depends on your actual working relationship, not what any agreement calls you. Under California law, no agreement can waive your rights as an employee if your work meets the legal definition of employment.

MYTH: “I receive a 1099 tax form instead of a W-2, so I’m a contractor.”
FACT: Receiving a 1099 is simply the result of how your employer has classified you for tax purposes. It does not determine your legal employment status.

MYTH: “I work remotely/off-site, so I’m a contractor.”
FACT: Both employees and independent contractors can work remotely. Your location does not determine your classification.

MYTH: “I have an LLC or business license, so I’m a contractor.”
FACT: Having business paperwork does not automatically make you a contractor, especially if the company required you to form a business entity to get the job.

MYTH: “It’s standard practice in my industry to be classified as a contractor.”
FACT: Industry practice does not override California law. If your work meets the legal definition of employment under the ABC test, you are an employee regardless of industry norms.

The Consequences of Misclassification for Workers

Being misclassified as an independent contractor has significant financial consequences:

• Lost Overtime Pay: Contractors don’t receive time-and-a-half for hours worked beyond 8 in a day or 40 in a week.
• No Minimum Wage Protection: Contractors aren’t guaranteed California’s minimum wage.
• No Expense Reimbursement: Employees must be reimbursed for business expenses, but contractors cover their own costs.
• Higher Tax Burden: Contractors pay the full 15.3% self-employment tax, while employees only pay half (the employer pays the other half).
• No Unemployment Benefits: Contractors cannot claim unemployment if the work ends.
• No Workers’ Compensation: If injured on the job, contractors have no workers’ compensation coverage.
• No Protection from Discrimination: Contractors lack the anti-discrimination protections granted to employees.

Steps to Take If You Think You’re Misclassified

If you believe you’ve been misclassified, consider these steps:

1. Document Your Working Conditions

Keep detailed records of:

• Your work schedule and hours worked
• How work is assigned to you
• Communications with managers/supervisors
• Company equipment you use
• Company policies you must follow

2. Gather Important Documents

Collect your:

• Independent contractor agreement
• Pay statements
• Tax forms
• Communications about your role
• Performance evaluations
• Company handbooks or policies you’re expected to follow

3. Assess Your Situation Against the ABC Test

Review how your working relationship matches against each prong of the ABC test. Remember, your employer must prove ALL THREE prongs to classify you as a contractor.

4. Consider Filing a Claim

You can file a:

• Wage claim with the California Labor Commissioner’s Office
• Report of Labor Law Violation for widespread violations
• Lawsuit in court

5. Be Aware of Anti-Retaliation Protections

California law prohibits employers from retaliating against workers who:

• Question their classification status
• File a claim or complaint
• Cooperate with an investigation

6. Consult with an Employment Attorney

An experienced California employment attorney can help assess your specific situation and guide you through your legal options.

Exemptions to the ABC Test

It’s important to note that California law provides exemptions to the ABC test for certain occupations and business relationships. These exemptions include specific professions like doctors, lawyers, accountants, and others listed in Labor Code sections 2775-2787.

However, even if an exemption applies, the relationship may still be evaluated under the older “Borello test,” which considers multiple factors with an emphasis on whether the hiring entity has the right to control the manner and means of accomplishing the desired result.

How TONG LAW Can Help

At TONG LAW, we focus on helping workers who have been misclassified as independent contractors recover the wages, benefits, and protections they’re legally entitled to. Our employment attorneys understand the nuances of California’s worker classification laws and can help you determine if you’ve been misclassified and what steps to take next.

If you’re labeled a contractor but have a manager directing your work, you may be entitled to:

• Back pay for overtime
• Meal and rest break premiums
• Expense reimbursements
• Penalties for labor code violations
• And other remedies under California law

Don’t continue to lose the benefits and protections you deserve. Contact TONG LAW today to discuss your situation and learn about your legal options.

This blog post provides general information for educational purposes only and should not be construed as legal advice. Every employment situation is unique. Please contact an attorney for advice specific to your circumstances.