California lawmakers recently passed legislation to raise minimum wage to $15 per hour by 2022. While these laws will have an immense impact of the 6 million California residents currently earning minimum wage, they will also affect the businesses that employ them. Read on to learn why California's minimum wage hike could lead to dishonest employers, and how to protect yourself from being denied workers' compensation if you're injured on the job.
The High Costs Of Minimum Wage
Whenever minimum wage goes up, business owners are faced with some difficult decisions. Not only do they have to raise the pay rate of their employees who earn minimum wage, but they also feel the need to raise the pay rate of their employees that earn higher than minimum wage in order to keep the pay rate gap between long-term, experienced help and new hires. And since nearly all employers must provide their employees with workers' compensation and workers' compensation premiums are based on current pay rates, employers can also expect to start paying more for the workers' compensation insurance they provide for their employees.
All of these factors add up to substantial rises in costs for business owners. So much so, in fact, that many will be forced to find ways to cut back on business costs in order to stay in operation.
How Business Owners Might Juggle These Costs
Some business owners may respond to their rising business costs by eliminating a few positions. Others may focus on lowering their workers' compensation premiums by reducing workplace accidents. For example, they may invest in more safety equipment, tighten safety procedures at their facilities, and hang more safety warning signs near dangerous equipment.
However, employers who can't afford to lose any help or invest in advanced safety measures may seek to cut costs by listing their employees as independent contractors so they don't need to provide them with workers' compensation insurance.
Signs Your Boss Has You Listed As An Independent Contractor
If you believe you've been hired as an employee, you think you have the peace of mind in knowing you'll be compensated if you're ever injured while at work. If your employer has you listed as an independent contractor, however, getting that compensation could be difficult, if not impossible. Because a boss who is attempting to be dishonest will likely not openly tell you that they haven't classified you as an employee, here are some signs to watch for in determining if you've been classified as an independent contractor.
You're Given A Little Too Much Leeway. How is your time spent at work? If you must clock in at a certain time, and you're given very specific tasks to accomplish and told how to do those tasks, you're probably an employee. If your boss suggests that you arrive by 8 a.m. yet imposes no consequences for being late, they may be trying to pull one over on you. Part of being an independent contractor is having control over your work environment, and if your employer is willing to give you that control, they may not technically be your employer.
You're Asked To Provide Your Own Equipment. Independent contractors usually specialize in a particular skill set, and they usually have all of the equipment they need to utilize that skill set. Employees, on the other hand, usually accomplish their jobs with equipment provided by their employers. If you've been hired by a newspaper to take photographs and your boss asks if you have your own camera, they may be trying to build a case that you were hired as an independent contractor.
Taxes Aren't Withheld From Your Paycheck. Employees generally have federal and state taxes deducted from their paychecks before they ever receive their pay. Independent contractors, however, are usually responsible for handling their own tax payments. If your paychecks are directly deposited into your checking account, make sure you're taking the time to open your pay stubs and ensure that taxes are being withheld. If they aren't, your boss may have classified you as an independent contractor.
With the recent rise in California's minimum wage, business owners in the state will soon be looking for ways to recover their added business costs. Make sure your boss isn't recovering their costs at your expense by watching for the above signs that they've classified you as an independent contractor rather than an employee.