Does the company you work for classify you as an independent contractor? If you work primarily for one company, are required to follow that company’s rules and policies, and have little control over how your work is performed, you may actually be an employee. The distinction matters because employees have many rights that contractors lack.
Read on to learn about your rights, including how to take action if you have been misclassified.
What Is an Independent Contractor?
Many people work as true independent contractors, working for clients they choose, setting their own prices, determining their own work hours, and deciding how to do the jobs for which they are hired. Employees, on the other hand, are subject to the control of their employers, who have the right to dictate how they do most aspects of their jobs.
Just because a company hands you a 1099 and calls you an independent contractor doesn't mean that you are one. Independent contractor status is a legal determination.
Courts look at a number of factors to determine whether a worker should be classified as an independent contractor or an employee, including:
- who supplies tools and equipment
- the type of work being performed, and
- how much control the hiring company has over the job.
Why Classification Matters
Today, lawsuits abound over misclassification of workers. Many of these claims are coming out of the gig economy, brought by freelancers, delivery people, drivers, and more. The reason is simple: Employees are entitled to many rights and benefits that are not available to independent contractors.
If you are improperly classified as an independent contractor rather than an employee, you may be missing out on overtime pay, health benefits, tax payments, and more.
Generally, independent contractors are responsible for paying all of the costs of running their business, while employees may be entitled to receive the following benefits from their employers or the state:
- minimum wage and overtime
- workers’ compensation coverage for on-the-job injuries
- unemployment compensation if they lose their jobs through no fault of their own
- reimbursement for job-related expenses
- payments towards their Social Security and Medicare accounts (employers pay half the total amount owed on behalf of employees, while independent contractors must pay the full amount for themselves), and
- health insurance under the Affordable Care Act, for those who work an average of 30 or more hours per week, for employers with at least 50 employees.
What to Do If You're Misclassified as an Independent Contractor
If you believe you have been incorrectly classified as an independent contractor when you are really an employee, you should talk to an experienced employment lawyer.
The test for whether you're an independent contractor depends on the facts and circumstances specific to your work arrangement, including your job duties, where you perform your work, the level of instruction you receive from the hiring company, and much more.
Because the analysis is complicated, you will need expert legal help to figure out how a court or administrative agency is likely to rule in your case.
Administrative Claims
A lawyer can also help you decide the best forum for your claim. For example, if you are concerned primarily with receiving minimum wage, overtime, and expense reimbursement, it might make sense to bring a wage claim with the federal Department of Labor’s Wage and Hour Division. (Learn more about how to file a wage and hour complaint.)
You have two years to file this type of complaint. Most states also have their own procedures to file an administrative wage claim, with their own time limits.
If your main concern is losing out on other types of benefits, other administrative avenues may be available to you. If, for example, you apply for unemployment compensation after being laid off, your employer might claim that you are not entitled to benefits because you are an independent contractor rather than an employee.
You would then have an opportunity to dispute that claim in a hearing before your state’s unemployment department.
Lawsuits
You also have the option of filing a lawsuit against your employer. This might make sense if you have a number of claims against your employer.
For example, let’s say you were fired after missing work due to an on-the-job injury. In addition to any overtime, reimbursement, and other wage claims you might have for the work you did, you might also have a claim that you were improperly denied workers’ compensation coverage, a claim for damages under the Family and Medical Leave Act, a claim for improper denial of unemployment benefits, and a wrongful termination claim.
Your lawyer can roll all of these arguments into one lawsuit against your employer.
Contact an Attorney
If you believe you've been misclassified as an independent contractor rather than an employee, contact an experienced attorney specializing in employment law to discuss your legal options.