How much can you sue an employer for misclassification? Employee misclassification may have major financial repercussions, depriving them of benefits, legal protections, and pay that they have rightfully earned. State and federal laws also impose sanctions for this activity.
Employees can safeguard their rights and guarantee just compensation for their time and effort by being aware of how employers may misclassify workers, their legal rights, and the time frame within which they have to take legal action.
A Misclassification: What is It?
The act of an employer incorrectly designating workers as independent contractors is known as misclassification.
How much can you sue an employer for misclassification: Understanding Employee Misclassification
When your company underpays you for wages or benefits based on your actual employment status, this is known as misclassification. Certain employers misclassify workers on purpose to save money and preserve the company’s profits, while other employers may do so because they are ignorant of the law.
Misclassifying workers may result in legal violations for employers under several federal and state statutes. The aforementioned rules not only penalize those who engage in this conduct but also compensate injured workers for their losses.
Misclassification: Why is It a Problem?
Employers can cut expenses by avoiding employment tax and insurance by misclassifying workers as independent contractors. But, as it frequently leads to less cost-effective employment and fewer workers’ compensation coverage, this classification frequently harms the worker.
For illustration purposes:
(1) Half of the employment tax that the employer would have otherwise paid is due to the employee. The employee loses out on several legal rights, including the ability to take medical or pregnancy leave, earn overtime compensation, and benefit from several wage and hour rules in California. (3) The employee might not qualify for unemployment benefits, even though they would have otherwise.
How much can you sue an employer for misclassification: What is the Employee Status Legal Test?
When determining whether a relationship qualifies as an employment relationship, courts will consider this and disregard the labels that employers and employees apply to it. A thorough examination of the circumstances follows a rebuttable presumption that the worker is an employee under Labor Code Section 2750.5. Courts will also take into account several variables, such as:
- Whether the contractor and the employer worked in the same field
- Whether or not the contractor worked unsupervised
- If the employee had a certain ability
- If the contractor brought their equipment (computers, software, email addresses, etc.)
- whether or not the job was temporary or permanent
- If the employee received a salary or an hourly wage
- Whether the worker received employee or contractor treatment
Types of Damages for Employee Misclassification
You can obtain damages to make up for your losses by filing a lawsuit. Additionally, your employer can be subject to statutory fines for each day that a misclassification infringement persists.
What is the maximum amount you can sue an employer for misclassification? Among the potential damages you could be able to get are these:
Overtime and Lost Wages
You may receive payment for the value of any meal or rest breaks that you were compelled to work through and should have been paid for. Furthermore, you may pursue reimbursement for these lost wages in your lawsuit if you worked longer than the 40-hour work week but were not paid an overtime rate.
For instance, certain lawsuits allow you to get up to $10,000 for lost income if your employer fails to pay you $5,000 in overtime over a year.
Limitations on Misclassification Claims Statutes
You may bring legal action in a misclassification matter by several federal or state statutes. These include Florida’s Minimum Wage Act and the federal Fair Labor Standards Act (FLSA) or Employee Retirement Income Security Act (ERISA).
Which legal channel you use to seek damages depends on several circumstances, including the relevant statute of limitations. The statute of limitations specifies how long you have, following a misclassification incident, to bring legal action.
Federal Limitations Statutes
It is important to consider two statutes of limitations. Depending on the damages you are pursuing, each has a different application.
The FLSA includes a two-year statutory period for misclassification lawsuits that seek unpaid wages or overtime. The statute of limitations is three years if you file an ERISA claim for unpaid retirement contributions.
Statutes of Limitations in Florida
A four-year statute of limitations governs claims for unpaid pay under the Florida Minimum Wage Act. This statutory limit is extended to five years if it is thought that your employer intentionally violated the law.
Helping You With Your Misclassification Claim: A Lawyer’s Advice
Claims of misclassification necessitate a careful examination, which includes reviewing documents and witness evidence. A knowledgeable attorney can represent you in court and speed up the procedure.
The lawyer should have the necessary tools to successfully defend the claim in court if negotiations break down. They can effectively present your case and deal with your losses thanks to their thorough investigation and adeptness in the courtroom.
FAQs on How much can you sue an employer for misclassification:
In California, how much may you sue an employer for misclassification?
Under California law, employers who knowingly misclassify their employees may be subject to civil penalties. The courts have the authority to sanction employers an extra $10,000 to $25,000 in cases where there is a pattern of deliberate misclassification. The fine can vary from $5,000 to $15,000 each infraction.
What is the punishment for classifying Paga incorrectly?
Penalties for employers who misclassify workers as independent contractors under Labor Code Section 226.8(a) can vary from $5,000 to $10,000 per instance. An employer faces a higher fine of between $10,000 and $25,000 for each infraction if they have a pattern or practice of breaking the law.
What sets off an audit for misclassification?
A whistleblower reporting misclassification, an employee submitting an SS-8 form to resolve a classification dispute, or a contractor applying for unemployment or worker’s compensation benefits might all cause an organization to conduct an audit.
