California classification and OT

I have a confusing question. I work for a company that has 1 parent but 2 subsideries. An employee works FT for 1 company and we want him to work 10 hours for the next company from home. Would this mean overtime or not because it is 2 companies? Should he be classified as a contractor even though we have him on normal payroll?

Asked on March 9, 2017 under Employment Labor Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

If there is a single common parent company, then the hours the employee works both companies would be added together to see if he earns overtime: if he works 40 hours for A and 10 hours for B, he would get overtime. This is done so that employers may not avoid the overtime rules by creating subsidiaries and attributing some of an employee's hours to one, some to another.
If he truly is an employee, you can't make him a contractor, not legally: the law doesn't care about what you call an employee, it cares about the facts of his employment. If the nature of his employment, his responsibilities, and how he is managed or supervised make it clear that he is an employee (regardless of what you call him), you must pay him as an employee. If you fail to do so and he sue or complains to the labor department (or it otherwise comes to the labor department's attention), not only could you be liable for all the back wages, overtime, benefits, and  employer portion of social security and medicare tax that you should have paid, but you could also be fined or be liable for his attorney fees.
 You can find the rules for when someone is an employee on the department of labor website. In brief, if you determine his hours, set where he works, and manage how he does his job, he is an employee, not a contractor, and must be paid as an employee. An *independent* contractor has a large degree of independence which employees lack.

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

If there is a single common parent company, then the hours the employee works both companies would be added together to see if he earns overtime: if he works 40 hours for A and 10 hours for B, he would get overtime. This is done so that employers may not avoid the overtime rules by creating subsidiaries and attributing some of an employee's hours to one, some to another.
If he truly is an employee, you can't make him a contractor, not legally: the law doesn't care about what you call an employee, it cares about the facts of his employment. If the nature of his employment, his responsibilities, and how he is managed or supervised make it clear that he is an employee (regardless of what you call him), you must pay him as an employee. If you fail to do so and he sue or complains to the labor department (or it otherwise comes to the labor department's attention), not only could you be liable for all the back wages, overtime, benefits, and  employer portion of social security and medicare tax that you should have paid, but you could also be fined or be liable for his attorney fees.
 You can find the rules for when someone is an employee on the department of labor website. In brief, if you determine his hours, set where he works, and manage how he does his job, he is an employee, not a contractor, and must be paid as an employee. An *independent* contractor has a large degree of independence which employees lack.


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