Wage and hour
California Employee Misclassification Lawyers
Two lies, one page. Either you are called an independent contractor when you are really an employee, or you are salaried with no overtime when you should be paid for every hour.
Either way the stakes are the same. A misclassified employee loses overtime, breaks, minimum wage, expense reimbursement, sick leave, workers’ compensation and unemployment coverage all at once. That whole stack is the case value.
The ABC Test: When Your 1099 Is a Lie
Under AB 5, codified at Labor Code section 2775, you are presumed an employee unless the hiring entity proves all three prongs:
- A. You are free from the company’s control, in fact and in contract.
- B. Your work is outside the hiring entity’s usual course of business.
- C. You are independently established in that trade, with your own business.
Prong B wins most cases. A delivery company calling its drivers “contractors” fails it, because delivery is the business. The test comes from Dynamex.
The Borello Carve-Outs
The ABC test is not universal. Certain occupations are tested under the older multi-factor Borello standard: doctors, lawyers, accountants, licensed insurance and real estate agents, some freelance writers and photographers under AB 2257, plus bona fide business-to-business arrangements.
App-based drivers sit under the separate Prop 22 regime.
What a Misclassified Contractor Recovers
Unpaid overtime and minimum wage, meal and rest premiums, and expense reimbursement under section 2802, where the mileage figure gets large for drivers.
On top of that, civil penalties for willful misclassification under Labor Code section 226.8: $5,000 to $15,000 per violation, and $10,000 to $25,000 for a pattern or practice.
Evidence to gather: who sets your schedule, whose tools and app you use, whether you can work for competitors, invoices versus timesheets, and any uniform or branding requirements.
Overtime Pay Calculator
If you were classified as exempt, meaning not owed overtime, when you should not have been, the overtime you were never paid is calculable. Daily, double time, and the seventh-day rule included.
Exempt or Not: the Fake-Manager Test
To treat you as an exempt, no-overtime employee, the employer must clear two hurdles. Fail either one and you are owed overtime.
The Salary Test
You must earn at least twice the state minimum wage for full-time work, which is $70,304 per year in 2026, or $1,352 per week. Below that number there is no white-collar exemption, period. The salary must also be a fixed amount not subject to deduction for the quality or quantity of work.
The Duties Test
More than half your working time must be spent on genuinely exempt duties, exercising discretion and independent judgment in the executive, administrative or professional categories.
Titles are irrelevant. A “store manager” running a register 60% of the day is nonexempt.
A Worked Example
A retail assistant manager paid $58,000 in 2026 fails the salary floor outright. At 50-hour weeks the regular rate is $27.88, from a $1,115.38 weekly salary divided by 40, so 10 weekly overtime hours at $41.83 come to about $418 a week. That is roughly $21,750 a year, before penalties, interest and fees.
Separate, higher tests exist for computer-software employees and licensed physicians paid hourly. Those figures refresh annually, so ask us.
Employer Tactics and Counters
“You Signed a Contractor Agreement”
The label and the signature decide nothing. The test looks at the real working relationship.
“Everyone in This Industry Is 1099”
Industry custom is not a defense. Prong B still applies.
A Raise to Just Under the Salary Floor, Plus a Title Bump
The Duties Test still applies, and so does the floor.
Converting Employees to Contractor Status After AB 5 Without Changing the Job
Strong evidence of willfulness under section 226.8.
What Is a Misclassification Case Worth?
It is the stacking answer: overtime plus breaks plus expenses plus penalties.
Run your true hours as an employee and see the difference.
Deadlines
3 years statutory, 4 years under the Unfair Competition Law, and 1 year for PAGA.
What to Do Right Now
- Keep your contracts, 1099s and pay records.
- Log your actual hours and duties for two weeks.
- Save app screenshots, schedules and instructions that show control.
- List the expenses you covered.
- Do not sign reclassification or release paperwork before a review.
Frequently Asked Questions
I signed a 1099 agreement. Am I stuck?
No. The relationship controls, not the paper.
Can I Be Part Employee and Part Contractor for the Same Company?
That is a red flag. Dual status rarely survives scrutiny.
Does Getting a W-2 Mean I Am Correctly Classified?
No. The exempt salary and duties tests still apply.
My title is “manager” but I do the same work as my crew.
The Duties Test asks how you actually spend your time, and the 50% line decides it.
What Happens to My Taxes If I Was Misclassified?
The employer bears the payroll tax consequences and you keep your wage remedies. For tax specifics, see a tax professional.
Will the Company Get in Trouble for the Whole Crew?
Yes. Section 226.8 pattern penalties and the PAGA route both apply. See class actions and PAGA.
What Is the Minimum Salary for Exempt Employees In 2026?
$70,304 per year, or $1,352 per week.
Employment Law Resources
- Labor Code 2775, AB 5 and the ABC test: leginfo
- Labor Code 226.8, willful misclassification penalties: leginfo
- California Labor Commissioner, independent contractor versus employee: dir.ca.gov
- California DIR, exemptions and the white-collar salary test: dir.ca.gov
Tell Us What Happened
One business day for a response. You pay nothing unless we win.