Many companies will hire employees as "independent contractors." However, in many cases, workers should have been classified as regular employees, entitled to overtime pay, paid time off, tax withholding, and other benefits.
It is very common for workers to be "misclassified," where they should have been paid wages as an employee, and not an independent contractor. Many "misclassified" workers are owed wages and accompanying penalties. The Supreme Court of California has laid out the basis for determining if a worker should have been an employee or an independent contractor. In Dynamex Operations West, Inc. v. Superior Court the court describes the so-called “ABC Test” for making this determination. The court describes the process for making this determination when they write:
“Placing the burden on the hiring entity to establish that the worker is an independent contractor who was not intended to be included within the wage order’s coverage; and (2) requiring the hiring entity, in order to meet this burden, to establish each of the three factors embodied in the ABC test — namely (A) that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; and (B) that the worker performs work that is outside the usual course of the hiring entity’s business; and (C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.”
For example, a software development company hires a developer as an "independent contractor." However, they sit next to other actual employees, and they attend daily meetings where their daily and weekly tasks are tracked and controlled.