Independent Contractor Misclassification
You come to work every day, and do your job alongside your peers, even working overtime hours when requested or needed. But you aren’t getting paid for any overtime hours. Typically, it costs more money for companies to have employees – nearly 30 percent more – because the employer has to pay minimum wage, overtime, payroll taxes and provide benefits. Thus, employers often (both intentionally and unintentionally) misclassify employees.
The following is a list of jobs where we commonly see employers illegally misclassifying employees to avoid paying them the overtime wages owed:
If I’m treated like an employee, but my employer classifies me an independent contractor and I signed a Form-1099, am I entitled to additional benefits from my employer?
If your employer treats you like an employee, but has classified you as an independent contractor, you may be entitled to additional wages even if you signed a Form-1099. Federal law requires employers to pay employees overtime wages for any hours worked after 40-hours in a week. However, to avoid this, many employers intentionally misclassify workers as independent contractors. Under the same laws that protect employees, independent contractors are deemed exempt from overtime pay.
From a legal perspective, it is particularly important that your employer recognize the difference between classifying employees and independent contractors, and correctly identify workers in order to ensure that employees are justly and legally compensated for their work. Employers often misclassify employees as independent contractors to avoid paying you overtime wages pursuant to federal law.
There are several differences between an employee and an independent contractor. If you are not sure how you should be classified, this may help:
• Independent contractors generally have specialized skills and are not integral to the day-to-day operations of the business. They are usually hired for a limited period of time or on a project basis.
• Typically, independent contractors work with more than one company, and they are responsible for their own business expenses. Taxes are not automatically deducted from their pay.
• Full-time employees are employed for an indefinite amount of time, earn either an hourly wage or a salary, and receive benefits from the company (like 401k contributions and health insurance).
• An employee’s job is not contingent on a particular project or assignment, but generally is important to the company’s business operations.
• An independent contractor is in business for his or herself and they have a limited scope of work they will perform.
• Employers are obligated to play employees minimum wage and overtime. There is no set minimum payment for independent contractors.
• If their job is terminated, an independent contractor cannot receive unemployment benefits.
Your employer may have misclassified you (either intentionally or intentionally) because it typically costs more money for companies to retain full-time employees – nearly 30 percent more – because the employer has to pay minimum wage, overtime, payroll taxes and provide benefits. It is a particularly common situation for employers to misclassify employees to save money and avoid paying their employees overtime wages.
How do I know if I’ve been misclassified?
If you are told which hours to work and are trained at work to do your job by the company, or if you have been working for the company for a significant amount of time and the company evaluates or reviews your, then you are likely legally considered an employee.
While there are many factors that go into determining whether an employee has been misclassified as an independent contractor, if you feel that you are doing a job that is integral to the company’s routine business functions, receive training in your position, and do the same type of work as your peers but do not receive overtime pay for you work, you have likely been misclassified as an independent contractor.
If you have been misclassified, you may be able to file a claim for unpaid overtime wages – which means you might be entitled to receive back wages for the overtime your worked at time and a half for any work exceeding 40 hours per week. Even if there is an independent contractor agreement on file between you and your employer, or if you agreed to the classification at the onset of the working relationship, legally, you may still be considered an employee who is entitled to all employee benefits. Working remotely or from an office outside of the company also does not preclude you from being considered an employee.