Legal Question in Employment Law in California

Re: Change status so don't have to pay out vacation time?

All vacation time that has already been earned ("accrued")cannot be forfeited. So the company still owes you the accrued vacation pay. In theory, you should still receive this, even though the company is in Chapter 11, but if the company is in danger of becoming insolvent, you may have a problem ever seeing the money. You need to investigate what is going on with them, if you can.

Whether you are legitimately considered an independent contractor depends on many factors, such as the degree of control the company has over your work, a required schedule you must maintain, whose tools or equipment you use and other things. If nothing has changed except your title, you are probably still an employee, regardless of what they call you.

However, the company does not have to change your status to avoid having to pay future vacation benefits. All they have to do is change their policy by saying that, due to financial problems, they are discontinuing any further accrued vacation. They still have to pay what was already earned, but have the right to cut it off for the future.