When your employer classifies you as an independent contractor or exempt employee but treats you like a regular worker, that's employee misclassification, and it costs you money. In my 29 years representing Los Angeles workers, I've seen clients lose tens of thousands of dollars in unpaid overtime, meal break premiums, and benefits they never knew they were owed. California law provides some of the strongest protections in the country against this practice, and understanding your rights is the first step to recovering what you've earned.
I've recovered over $300 million in settlements and verdicts for workers throughout Los Angeles and surrounding areas. Most people don't realize they've been misclassified until they sit down with an attorney and we walk through what their actual job duties are versus what the law requires. To help you better understand your rights, we'll break down what a misclassification attorney does, why proper worker classification matters so much to employers and workers alike, and how our Los Angeles employment attorneys play pivotal roles in misclassification lawsuits.
Key Points - Table of Contents
- Our Results in Misclassification Cases
- California's ABC Test for Independent Contractors
- Signs You've Been Misclassified
- What You Can Recover
- Frequently Asked Questions
- Why Employees Trust Our Los Angeles Lawyers
- Getting Help From A Qualified Attorney in California
Our Results in Misclassification Cases
$44,000,000 Settlement - Misclassified Stock Brokers
Stock brokers were improperly treated as exempt employees, resulting in the denial of essential employment protections and benefits, including overtime pay, minimum wage guarantees, and employee benefits.
$11,000,000 Settlement - Misclassified Managers and Assistant Managers
Managers and assistant managers were performing tasks typically associated with clerks. More than 50% of their work involved stocking shelves, cashiering, and similar tasks, which necessitated their eligibility for overtime pay.
$4,000,000 Settlement - Misclassified Designers and Producers
A national software company misclassified designers and producers, highlighting important employment law issues.
$1,700,000 Settlement - Misclassified Restaurant Managers
A major national restaurant chain misclassified employees as managers and assistant managers.
$1,700,000 Settlement - Misclassified Pharmacy Representatives
A major national pharmaceutical company misclassified pharmacy representatives.
$1,500,000 Settlement - Misclassified Model Home Sellers
A national home builder misclassified model home sellers.
California's ABC Test for Independent Contractors
The most important development in California employment law over the past few years has been AB5 and the ABC test. This law fundamentally changed how we determine whether someone is truly an independent contractor or a misclassified employee. Unlike the old multi-factor test or federal law, California now puts the burden entirely on the employer to prove all three elements of the ABC test. If they can't prove even one element, you're an employee.
The Three Prongs
Prong A: Free from Control and Direction
The employer must prove you're free from their control and direction in performing your work, both under your contract and in actual practice. Control means more than just setting your own schedule. I look at whether the company tells you how to do your work, requires you to attend meetings, mandates specific procedures, or monitors your performance through apps or supervisors.
Prong B: Work Outside Usual Business Course
This is where most employers fail. The company must prove your work is outside the usual course of their business. If you're performing work that's central to what the company does, you're an employee. A driver working for a delivery company is performing the company's core business. A janitor working for a janitorial service is performing that company's core business.
Prong C: Independently Established Trade or Business
The employer must prove you have your own independently established trade, occupation, or business doing the same kind of work you're performing for them. This means you're customarily engaged in that work independently, you have multiple clients, you advertise your services, you have a business location, and you hold yourself out to the public as available for hire.
A true independent contractor runs their own business. They have business cards, a website, other clients, and the ability to negotiate rates. If you work for one company full time, use their equipment, and don't market yourself to anyone else, you don't have an independently established business.
AB5 Exceptions and Exemptions
AB5 includes specific exemptions for certain professions like doctors, lawyers, architects, engineers, private investigators, accountants, and some creative professionals. But here's what I see employers get wrong constantly: they assume anyone who might fit these categories is automatically exempt. That's not how it works.
Even if your profession is listed as exempt from the ABC test, California still applies a different test to determine if you're properly classified. And many workers who think they fall under an exemption actually don't because the exemption has specific requirements that aren't met. For example, the exemption for marketing professionals requires you to set your own rates and maintain your own client base, not just work for one company doing their marketing.
Exempt Employee Misclassification
Calling someone exempt and paying them a salary doesn't make it legal to skip overtime pay. California has strict requirements that must be met, and we have seen employers fail these tests a number of times. In fact, we've author an article about California overtime laws explained. The consequences are expensive because once we prove misclassification, you're entitled to years of unpaid overtime at time and a half for hours over eight per day and 40 per week, plus double time for hours over 12 in a day.
California's Requirements
Any good overtime lawyer in Los Angeles can likely tell you that to legally classify someone as exempt from overtime in California, employers must satisfy both a salary test and a duties test. There are no shortcuts or exceptions.
- Salary Basis: As of 2025, the minimum salary for exempt employees in California is $68,640 per year for most exemptions. This must be a guaranteed salary that doesn't fluctuate based on hours worked.
- Duties Test: The employee's primary duties must involve executive, administrative, or professional tasks that require discretion and independent judgment on significant matters.
- Both Required: Meeting just the salary threshold means nothing if your duties don't qualify. Meeting the duties test means nothing if you're not paid the required salary.
Here's what catches most employers: they think paying someone $70,000 a year automatically makes them exempt. Our firm has seen workers who were paid above the salary threshold but spent their days doing routine clerk work.
The duties test requires that more than 50% of your time is spent on exempt duties. If you're a manager who spends most of your shift doing the same work as the people you supposedly supervise, you're not exempt. California doesn't care what your job title is. We look at what you actually do.
Misclassification Examples
| Job Title | What Employer Claims | Tasks | Result |
|---|---|---|---|
| Assistant Manager | Manages employees, exempt | Stocks shelves, works register, opens/closes store | Non-exempt, entitled to overtime |
| Sales Representative | Outside sales, exempt | Makes calls from office, follows company script, no negotiation authority | Non-exempt, entitled to overtime |
| IT Help Desk | Computer professional, exempt | Follows troubleshooting flowcharts, no system design work | Non-exempt, entitled to overtime |
| Office Administrator | Administrative duties, exempt | Answers phones, files documents, schedules appointments | Non-exempt, entitled to overtime |
We settled a case for a group of managers and assistant managers who were performing tasks that would typically be associated with a clerk. These employees spent more than half of their work time stocking shelves, operating cash registers, and handling similar non-managerial tasks. Because their primary duties did not meet the legal requirements for exempt status. Our work on the case ultimately resulted in an $11,000,000 settlement for misclassification.
Getting paid a salary instead of hourly doesn't make you exempt. Period. The white collar exemptions in California require genuine executive, administrative, or professional work with real discretion and independent judgment. If your employer tells you exactly what to do, how to do it, and when to do it, you're not exercising independent judgment. If you can't make meaningful decisions that affect the company's operations, you're not exempt.
Signs You've Been Misclassified
Most workers don't know they've been misclassified until something prompts them to question their classification. Maybe they talk to a coworker who's paid hourly for the same work. Maybe they leave the job and realize how much overtime they worked. The red flags are usually obvious once you know what to look for.
Independent Contractor Red Flags
- You work for only one company: True independent contractors have multiple clients and the freedom to work for competitors.
- They set your schedule: If the company tells you when to work, when to take breaks, or requires you to be available during specific hours, that's control.
- You use their equipment and tools: Independent contractors typically provide their own tools, vehicles, equipment, and supplies.
- You receive a 1099 but work exactly like their W-2 employees: If you're doing the same work, in the same place, under the same supervision as employees, you're an employee.
- You can't hire helpers or subcontract your work: Independent contractors can delegate work to others without company approval.
- They restrict you from working for competitors: Non-compete requirements are a strong indicator of employee status.
- You get performance reviews and discipline: Companies don't review or discipline true contractors, they just end the relationship if they're unsatisfied.
Exempt Employee Red Flags
- Your salary is below the threshold: If you make less than $68,640 per year, you cannot be classified as exempt in California, regardless of your duties.
- You have no real discretion or independent judgment: Following a manual, getting approval for decisions, or executing someone else's decisions doesn't count as independent judgment.
- Your duties are primarily manual or routine: Data entry, filing, customer service, stocking, cleaning, and similar tasks are non-exempt work.
- You're a manager in title only: Having "manager" in your job title means nothing if you don't hire, fire, discipline, or direct other employees.
- You're required to clock in and out: Why would an exempt employee need to track their hours? This suggests the employer knows you're really non-exempt.
- You do the same work as hourly employees: If you spend most of your time doing what non-exempt workers do, you're probably misclassified.
What You Can Recover
When we sit down with a misclassified worker and calculate what they're actually owed, the numbers may shock them. They had no idea their employer's classification had cost them so much money. California's wage and hour laws provide multiple categories of damages, and they add up quickly when you go back three or four years.
Available Damages
- Back Wages for Overtime: Every hour over eight per day at time and a half, every hour over 12 per day at double time, and the seventh consecutive day at time and a half (first eight hours) or double time (over eight hours). For someone working 50 hours a week, that's 10 hours of overtime every week.
- Meal and Rest Break Premiums: One hour of pay at your regular rate for each day your employer failed to provide a compliant 30-minute meal break or 10-minute rest breaks. If you worked through lunch or breaks five days a week, that's $1,000 per week at a $50 hourly rate.
- Expense Reimbursement: Mileage, cell phone use, tools, uniforms, supplies, and any other costs you incurred for work. Independent contractors often spend thousands on gas, vehicle maintenance, and equipment that should have been reimbursed.
- Waiting Time Penalties: If the employer doesn't pay all wages owed immediately when you're terminated or quit with notice, you're entitled to continue receiving your daily wage rate for up to 30 days. This can add $10,000 to $15,000 to your recovery.
- PAGA Penalties: The Private Attorneys General Act allows you to recover civil penalties of $100 for the first pay period violation and $200 for each subsequent violation, per employee. In a case with multiple misclassified workers, PAGA penalties can reach six or seven figures.
- Attorney Fees and Costs: California Labor Code requires employers to pay your attorney fees and litigation costs when you prevail on wage claims, so you keep 100% of your wage recovery.
Questions to Ask Yourself
Run through these questions honestly. If you answer yes to two or more, you should call us today for a free consultation:
- Do you work for just one company but receive 1099s?
- Does your employer set your schedule or require you to be available during specific hours?
- Do you use equipment, vehicles, or tools provided by the company?
- Are you paid a salary but spend most of your time doing the same work as hourly employees?
- Does your employer tell you how to do your work or discipline you for not following procedures?
- Do you work more than eight hours a day or 40 hours a week without receiving overtime?
- Have you paid for work expenses like mileage, supplies, or phone use without reimbursement?
- Are you called a manager but have no real authority to hire, fire, or discipline workers?
- Does your employer require you to wear uniforms, attend meetings, or follow company policies?
- Do you make less than $68,640 per year but your employer says you're exempt from overtime?
Frequently Asked Questions
What is a misclassification lawsuit?
A misclassification lawsuit arises when an employee alleges they've been wrongly classified as an independent contractor, denying them benefits and fair pay.
What are the consequences of misclassification?
Misclassifying employees can lead to back pay for unpaid overtime, fines, penalties, and even legal action from workers or regulatory bodies.
What triggers a misclassification audit?
Anomalies in tax filings or complaints by workers often trigger audits that probe potential employee misclassifications.
Why Employees Trust Our Los Angeles Lawyers
Our Los Angeles employment attorneys have decades of combined experience handling misclassification claims, securing millions in settlements for workers wrongly denied overtime pay, benefits, and other protections. We've consistently demonstrated our trial readiness, taking cases to court when employers refuse fair settlements, and our track record of multi-million dollar verdicts speaks for itself. Clients praise our deep understanding of California employment law and our hands-on approach to fighting for workers' rights throughout Los Angeles County. We have helped many victims and hope to count you as our next success story.
Getting Help From A Qualified Attorney in California
Understanding the complex world of worker classification isn't easy, but with a misclassification attorney by your side, it becomes more manageable. These professionals fight for workers' rights and fair wages. You've learned how important proper worker classification is - affecting everything from compensation to legal protections. Misclassifications can lead to lawsuits where these attorneys step in.
You've discovered that employees and independent contractors are distinguished by several factors under labor laws, which often gets blurred in today's gig economy. But you're not alone - help is out there. If you feel you've been improperly classified at work, seek guidance from an experienced misclassification attorney who knows the ins-and-outs of employment law like nobody else does.
For those who have been misclassified that want assistance from experienced attorneys, contact Kingsley Szamet Employment Lawyers by filling out our contact form. Our misclassification attorneys have recovered $300 Million in settlements and verdicts. Fill out the form on this page for your free consultation.
Kingsley Szamet Employment Lawyers
16133 Ventura Blvd #1200
Encino, CA 91436
(818) 572-4143
