Employee misclassification is one of the most widespread employment law violations in California. It occurs when an employer improperly classifies a worker as an independent contractor instead of an employee, or as an exempt employee who is not entitled to overtime pay. Misclassification deprives workers of minimum wage, overtime, meal and rest breaks, workers' compensation, unemployment benefits, and other critical protections. California's worker-friendly laws make it a prime jurisdiction for challenging misclassification.
Under California's landmark AB 5 and the Dynamex decision, a worker is presumed to be an employee unless the employer can prove all three prongs of the ABC test: (A) the worker is free from the control and direction of the hiring entity, (B) the worker performs work outside the usual course of the hiring entity's business, and (C) the worker is customarily engaged in an independently established trade, occupation, or business.
Under California law, to be classified as exempt from overtime, a worker must earn at least twice the state minimum wage (for a full-time equivalent) and spend more than 50% of their time performing exempt duties such as managing the business or exercising independent discretion on matters of significance. Misclassifying a non-exempt employee as exempt is a common violation.
California imposes significant penalties for willful misclassification. Employers may face civil penalties of $5,000 to $25,000 per violation under the Labor Code, in addition to back pay, interest, attorney's fees, and PAGA penalties. The law also allows for joint and several liability against businesses that contract with entities that misclassify workers.
Employment misclassification occurs in two primary forms: (1) independent contractor misclassification, where an employer treats a worker as an independent contractor when they meet the legal criteria for an employee under California's ABC test, and (2) exempt misclassification, where an employer denies overtime and breaks to a worker who does not satisfy the duties test for executive, administrative, or professional exemptions. Both forms can result in significant liability for the employer.
A W-2 employee is entitled to minimum wage, overtime, meal and rest breaks, workers' compensation, unemployment benefits, and other protections. A 1099 independent contractor receives none of these protections and is responsible for paying their own payroll taxes. If you are classified as a 1099 worker but are treated like an employee under the ABC test, you may be misclassified.
Yes. Under California law, the legal classification of a worker is determined by the actual nature of the work relationship — not by what the employer calls you or what you signed. Even if you signed an independent contractor agreement, you are an employee if the ABC test is not satisfied. Such agreements do not waive your rights.
Misclassified workers may recover unpaid overtime, missed meal and rest break premiums, unreimbursed business expenses, waiting time penalties, civil penalties, and attorney's fees. You may also be able to seek penalties on behalf of similarly misclassified workers under PAGA if the employer has violated Labor Code provisions applicable to all affected employees.
Our firm has successfully challenged both independent contractor and exempt misclassification across a range of industries. We understand the nuances of the ABC test and the specific requirements for exempt classifications under California law. We pursue all available remedies — from individual back pay to PAGA penalties — to ensure our clients receive the full compensation and protection they are owed.
We work on a contingency fee basis, meaning you don't pay us unless we win your case.
We have a proven record of securing substantial compensation for our clients.
If you believe you have been misclassified as an independent contractor or wrongly treated as exempt from overtime, you may be entitled to significant back pay and penalties. Contact The Azizi Firm for a free consultation. We handle misclassification cases on a contingency fee basis — no fees unless we recover your wages.
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