Employment Law – Employees, Independent Contractors and Interns

stock-photo-group-of-business-people-with-businessman-leader-on-foreground-117648706California Employment Law Blog Series #2

Welcome back to our California Employment Law blog series! In our last post we brought up several of the typical questions business owners have about working with employees while doing business in California. Over the coming weeks we will be tackling some of these questions.

Misclassification of the people involved in the operations of your business can cause significant legal problems. We hope today’s blog can help clarify some of the issues that may come up in your business and encourage you to seek out personalized legal representation if you are currently dealing with the classification of the individuals who help you with your business.

Employees in California

Traditionally, business relationships involve an employer and its/his/her employees. In California, the basic test for determining whether a worker is an independent contractor versus an employee is to look at whether or not the employer has the right to direct and control the manner and means by which the individual’s work is performed.

In traditional employer/employee relationships, the employer provides a location for the employee’s work, the tools necessary to complete the employees task and controls not only the outcome of the assigned tasks but how the employee goes about executing and completing those tasks. Unfortunately, for many employers, their relationships with their support staff aren’t always as clearly defined as the law would like. Additionally, flexibility within the work environment may lead them to mistakenly assume that a member of their support staff should be classified as an independent contractor rather than an employee.

If you are unsure about whether or not you have the “right to control” a particular employee you can reference the 20 point test provided by the IRS and reprinted on our blog.

Independent Contractors in California

Independent contractors on the other hand, enter into limited contractual relationships with the “employer” to complete a certain project or set of tasks. The parties define the scope of the work to be performed by the contractor and set deadlines for delivery; however, the hiring party does not control the means of production and rarely provides the tools needed by the contractor to complete the agreed upon tasks.

Interns in California

Despite what some people may think, interns are not free labor. Internships are allowed as a way for people to obtain skills through training and mentorship at an established company. While the company does not compensate the intern for his or her time, the inter gains valuable skills and connections within a desired industry. In order to legally have an intern, a company must comply with the following restrictions:

  1. Interns cannot displace regular employees.
  2. Interns are not guaranteed a job at the end of the internship.
  3. Interns are not entitled to wages during the internship period.
  4. Interns must receive training from the company, even if it somewhat impedes on the work of the organization.
  5. Interns must get hands-on experience with equipment and processes used in the industry.
  6. Interns’ training must primarily benefit them, not the company.

That final point is the requirement that is most often ignored by companies and leads to a high number of complaints and investigations. If you do not intend to train your intern in a way that primarily benefits them, you will be much better off hiring a part-time employee or connecting with an independent company who can provide the services you need for your business.

We encourage you to check back next time as we explore setting expectations in employer/employee relationships.

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All information and material contained within this post is believed to be accurate. Nonetheless, it should not be considered legal advice on any particular topic. All fact patterns are potentially different and you should not act on information contained in the website without seeking advice from a legal professional specific to your particular situation.