Wrongful termination claims arise from situations that involve employees firing their employees without a valid reason. The Workers Compensation Group in Long Beach helps 1099 independent contractors (among other employees), to file such claims. Courts allow plaintiffs to bring such lawsuits, provided they have a legal basis. In this guide, we discuss the laws and procedures that 1099 independent contractors can use when they are wrongfully terminated.
Who is an Independent Contractor?
While independent contractors render services to other parties, they should follow the hiring party's instructions on how the results should be. They do not have to follow the hiring party's instructions on how to accomplish or execute the given job. A company may hire an independent contractor from a second company to carry out various tasks. One of the reasons a company would use this approach is to avoid having its employees work on the tasks.
An independent contractor can work on a self-employment basis when hired to execute a job. The phrase "independent contractor" has a broader meaning that encompasses individuals and firms. A report done by the U.S Bureau of Labor Statistics revealed that about 6.7 percent of the workforce in the country (approximately 8.5 million workers) are independent contractors. Most of them prefer this approach to employment for flexibility reasons. There are cases of companies terminating their workers and bringing them back to work as independent contractors to work on their previous job duties with no benefits.
Unlike other workers, independent contractors are not protected by labor laws such as wage and hour and anti-discrimination laws. Hiring parties do not have to pay federal unemployment insurance taxes, Medicare, or social security on their behalf. The IRS does not mandate their employers to withhold part of their income as income taxes.
Differences Between an Independent Contractor and an Employee
Since there is no specific definition of the phrase "independent contractor," your particular situation will determine whether you are working as an independent contractor or an employee. The California Division of Labor Standards (DLSE) usually examine cases such as yours by classifying the individual as an employee. The facts of the service provided and the control you have over the job help determine your employment status.
Independent contractors usually have a higher level of investments in the materials or equipment needed by their tasks. They also render services that require unique skills without the supervision of the hiring party. Their work does not form part of the hiring party's regular business activities. The working relationship between an independent contractor and the hiring party may be shorter than that of an employee, just like the length of time for rendering the services.
Which Agencies Determine the Independent Contractor Status in California?
The DLSE (Division of Labor Standards Enforcement) and the Employment Development Department (EDD) are the state agencies that help classify workers as independent contractors. DLSE focuses on whether independent contractors should be protected by workers' compensation insurance and wage and hour laws. EDD, on the other hand, focuses on employment-related taxes. Besides DLSE and EDD, other agencies with requirements or regulations regarding independent contractors include:
- The Contractors State Licensing Board
- Division of Workers Compensation
- The Franchise Tax Board
An individual can be considered as an independent contractor by one particular law and an employee under a different law. This possibility arises since there are different laws involved in situations such as wrongful termination. The potential penalties and liabilities are significant if you were initially working as an independent contractor but turned out as an employee. The state agencies listed above may intervene in your case once research and analysis on the case suggest that they have an independent contractor status with a hiring party.
Labor Code 2750.5 does not list independent contractors among the individuals who require a license to perform services in California. However, the Business and Professions Code 7000 makes it necessary for any worker performing services to obtain a permit. Practices such as medicine require practitioners to possess state-issued licenses regardless of their employment status.
Does a Written Agreement Determine the Independent Contractor Status?
An employer can make you sign a written agreement classifying you as an independent contractor. However, the contract may offer a partial legal basis for your independent contractor status. Courts, as well as the Labor Commissioner, always examine facts defining your relationship with the hiring party. They will determine your employment status after analyzing such circumstances and applying the relevant law rather than relying on the written agreement.
Wrongful Termination Claims for Independent Contractors Whose Incomes were not Reported to the EDD
Service recipients (which include government entities and businesses) must regularly report specific information to the EDD on their independent contractors. They must have Form 1099-MISC filed for services carried out by the contractor. The EDD requires them to report income information if the independent contractor earns $600 or higher. Information reported to the EDD helps increase the collection of child support for parents who default their child support obligations.
The California Employment Development Department runs an online portal to facilitate independent contractor reporting. The portal requires hiring parties to submit information related to their independent contractors' employment status. These details may include name, address, Social Security number, and the date the contract started. Others include the length of the contract or working relationship and the expiration date of the agreement.
Your hiring party will incur a penalty of $24 for failing to report this information within the given time frames. If the report was falsified or the failure to report was intentional, the EDD will charge a $490 penalty. The EDD does not process wrongful termination claims for any individual. While your employer incurs a penalty for failing to report your work-related information, you can file the wrongful termination with the court.
The Basis of a Wrongful Termination Claim for 1099 Independent Contractors
California courts usually examine the cause of action for a wrongful termination claim to determine whether a 1099 independent contractor can file it or not. You may file a suit against your employer to report unlawful conduct. Your claim may also help you seek justice when fired for refusing to break the law or exercising one of your rights. As a plaintiff, you must truthfully state the ways the employer violated your rights when terminating your employment.
Once you pursue a wrongful termination claim, the court will consider your employment status, among other factors, to help solve your case. If the employer violated a policy or breached an agreement, you must explain breach or violation. The court will want to know the purpose of the contract or policy and whether it helps protect you. Your lawyer should explain whether the statute protects your interests that are not related to your employment status.
1099 independent contractors cannot base their wrongful termination claims on policies enacted in favor of employees only. For example, if an employer terminated your contract for refusing to submit to a polygraph exam, you do not have a case against them. Still, on this example, the court will not allow you to base your claim on a statute (if there is any) prohibiting employers from giving these exams. The laws enacted to protect employees may not necessarily protect the rights of 1099 independent contractors.
Filing a Wrongful Termination Lawsuit for Independent Contractors
Once you have legal standing for pursuing a wrongful termination suit, ensure you are a legal entity or a natural person to start the lawsuit. A natural person is an individual or a group of people on either side of a suit. Legal entities in a suit may include the government, a nonprofit organization, or a corporation.
California courts require plaintiffs to have the legal capacity of being part of a wrongful termination lawsuit. They consider children below 18 years of age and people who are mentally incompetent (because of age, infirmity, or illness) as people with a legal disability. A mentally incapable individual needs an executor or trustee to speak on their behalf in a lawsuit.
Finding the Names and Addresses of the Hiring Party
When you sue an employer, state their legal name or business names and addresses. You can obtain this information from the paperwork or documents you have about the wrongful termination situation. You can get their names and addresses from the county tax assessor's office or from a public library (when their phone number is known).
If you are suing a corporation, you can get their information from the Secretary of State Business Search online portal. Names and addresses of the owners of sole partnership or proprietorship businesses can be obtained from the county recorder or clerk’s website. If the hiring party runs a limited partnership business, you can get information about the business from the Secretary of State’s Business Search online portal.
Filing the Lawsuit at the Court
Various rules apply to plaintiffs looking to file their papers in court. The court will require you to submit the original copy of your documents plus two extra copies. Original copies of the documents remain at the court. A court clerk will stamp the copies as “Filed” and hand them over to you. Always include the correct case number on the paperwork.
Courts usually offer plaintiffs a case number any time they are filing paperwork after the first complaint or petition. If you have several pending or ongoing cases, use the right case number for the specific papers you want to file. Since this process requires the highest level of accuracy, it would be best if you allowed your lawyer to file the paperwork on your behalf.
Can You File the Court Papers Via Mail?
Contacting the court clerk can help you determine with your local court allows plaintiffs (with a case like yours) to file the paperwork by mail. Submitting the papers by mail may slow down the court process and may result in security issues. Confirm with the clerk the number of copies needed, the filing fee, and the local court's mailing address if there is a need to file the documents by mail.
What Evidence Do 1099 Independent Contractors Need for a Wrongful Termination Claim
If a hiring party terminated your employment when working as an independent contractor, your chances of recovering damages will depend on how you act. Consider contacting a workers’ compensation attorney to help you pursue this legal action. Gathering and preserving any evidence related to the matter is a prerequisite to building a solid case against the employer.
The evidence needed for this kind of lawsuit will include documents (given by the hiring party) highlighting your termination. You also need documents (such as copies of past performance reviews and the termination letter) indicating your performance at work before the employer terminated your contract. Consider requesting the documents from the hiring party with the help of your lawyer if you did not obtain them at the course of your employment.
Conversations about your performance at work and the termination itself can form part of your evidence against the employer. The conversations you made when seeking a job can help your course. Your workers' compensation attorney may help you determine whether they are relevant to your case. Write them down, securely store them, and ensure they have the date or time, location, and the names of the respective participants.
Statute of Limitations for 1099 Independent Contractors Filing Wrongful Termination Claims
The type of wrongful termination suit you are pursuing will determine the statute of limitations for the suit. Once the deadline for bringing the lawsuit to court elapses, you will no longer have the chance to sue your employer. The clock starts ticking on the date the hiring party terminated your employment. Outlined below are the different deadlines for wrongful termination claims filed by 1099 independent contractors in California:
- Two years for wrongful termination violating an oral contract
- Three years for a whistleblower who was wrongfully terminated (under Labor Code section 1102.5)
- Two years for wrongful termination that is a public policy violation
Types of Damages a 1099 Independent Contractor Can Recover from a Wrongful Termination Suit
When your wrongful termination case against a former employer prevails, a California court will award you monetary damages. They include lost income, attorney fees, punitive damages, and compensation for non-economic losses. The facts surrounding your case and the legal grounds for your suit help determine the type and amount of damages you may recover. Discussed below are the types of damages an independent contractor can recover from the lawsuit:
- Economic Damages
Lost income forms part of the compensatory damages a plaintiff can recover from a wrongful termination lawsuit. It would help if you adequately convinced the jury that you deserve the lost revenue for being a victim of wrongful termination. While giving the award, the court will consider the value of the income you would have earned from the hiring party from the date of the wrongful termination to the date of the court ruling. Other factors considered in the calculation of lost income include the value of contractual damages the employer's behavior caused and your future income.
- Non-economic Damages
A wrongful termination lawsuit may allow you to seek non-economic damages when you were working as an independent contractor. Common types of non-economic damages you can recover include damages for lost professional reputation and damages for mental suffering. You cannot seek non-economic damages for suffering emotional distress if you were working as an independent contractor. Damages for emotional distress are only available to employees in wrongful termination cases whose jobs are not based on contracts.
- Punitive Damages
Instead of compensating an independent contractor for expenses or harms incurred or suffered due to wrongful termination, punitive damages punish hiring parties for their wrongdoing. A court will only award you punitive damages if the wrongful termination rose to the level of malice, or fraud. For instance, you may seek punitive damages if an employer said negative and untrue things about your work to your potential clients. In this example, the employer’s behavior is considered as malice.
- Litigation Costs and Attorney Fees
Litigation costs in a wrongful termination claim brought by an independent contractor may include expert witness fees and court fees. Attorney fees, on the other hand, encompass sums of money spent on hiring and working with a lawyer. In most employment lawsuits pursued in California, plaintiffs usually pay the litigation costs and attorney fees from their pockets or from the damages they recover from the defendant. The specific facts of your particular case and the nature of your work will determine whether you can collect these fees from the hiring party in addition to other damages.
Is it Possible to Mitigate the Damages in a Wrongful Termination Lawsuit Brought by an Independent Contractor?
When you choose to mitigate damages in a wrongful termination suit, you will be exploring alternative ways to cover the financial loss you suffered. The alternative methods include accepting another job to compensate for your losses from the wrongful termination. Courts always consider the extent to which the plaintiff did or could mitigate damages before awarding lost income in a wrongful termination case. A court will reduce the award earned from the lawsuit by the amount you earned or could have received from a job that is similar to your previous one.
The court will evaluate factors like the nature of work and skills, experience, and background needed for the new job to determine whether the new job is similar to the old one. Other factors, such as the job responsibilities, location, responsibilities, and earnings of the new job, also count in this context. If you failed to seek or retain a job opportunity that is similar to the previous one offered by the same employer, the court might reduce your award of damages.
Factors a Lawyer will Consider Before Taking Your Wrongful Termination Case
Wrongful termination lawsuits are difficult to pursue without expert legal knowledge or experience. You will need an attorney with an impressive track record in this field to handle your case. Before taking your case, the lawyer will consider the following factors to assess whether there was a legal cause for termination:
Did You Sign a Contract?
The conditions included in your contract may provide the legal grounds for pursuing a wrongful termination claim against your employer. For instance, if the employer agreed not to terminate your job until you are done, you may sue them for breaching this contract. Your lawyer can go through the written agreement and explore loopholes that would increase your chances of winning the lawsuit.
Were There Any Due Unpaid Wages?
Your attorney will want to know whether the hiring party fully paid your due wages at the time the job was terminated. The unpaid wages can form part of your lawsuit against the employer. In this case, you will seek unpaid wages as part of the economic damages in your wrongful termination lawsuit.
Do You Have Adequate Documentation?
Documents such as performance review reports and daily work logs are crucial when building a case against an employer who wrongfully terminated you. The papers must contradict the hiring party's reasons for terminating your job. Share the original copies of this paperwork with your attorney as you build your case against the employer.
Are There Any Pieces of Evidence or Witnesses?
Witnesses and pieces of evidence help support wrongful termination claims. Maintain a list of the names and contact information belonging to your witnesses. The witness statements and pieces of evidence have to be substantial for the lawyer to handle your case. Your lawyer will expect you to be the most valuable witness in the case. As a terminated independent contractor, you must be presentable, organized, concise, honest, and clear every time you are brought to the court to testify.
Find a Long Beach Wrongful Termination Attorney Near Me
A wrongful termination suit may take the shortest time possible to solve when you involve a skilled attorney. The Workers Compensation Attorney Group offers independent contractors and employees across Long Beach, peace of mind when pursuing their suits against employers. You can request us to handle your work-related case by calling us today at 714-716-5933.
