What Happens if you are Misclassified as a Worker?

As a working individual, there are a few different ways your job can be classified. The most common way is as an employee. As an employee, your employer withholds taxes from your regular paychecks and you must file a W2 form each tax season. There are many benefits to being an employee, such as the right to earn at least the federal minimum wage, the right to pursue Workers’ Compensation if you are injured at work, and the right to take unpaid time under the Family and Medical Leave Act and return to your previous position when the leave is over.

There are also restrictions that come with being an employee, like having to work according to your employer’s schedule and perform work as your employer wants it done. An independent contractor, another type of worker, is not bound to these requirements. An independent contractor also does not have many of the rights an employee enjoys and must pay his or her own taxes, a fact that can make it quite tempting for an employer to misclassify an employee as an independent contractor.

Which Industries Misclassify Workers Most Often?

Misclassification can occur in any industry. One specific industry where employees are often misclassified as independent contractors is the construction industry. Other industries where it often occurs include agriculture, home health care, trucking, and childcare.

Determining if you are a Misclassified Worker

The Internal Revenue Service (IRS) maintains a set of 20 factors that workers can use to determine whether they should be classified as employees or independent contractors. Overall, the factors fall into three categories: behavioral control, financial control, and the relationship between the worker and employer.

A few of these factors are:

  • The expected length of the parties’ relationship. While an employee typically expects an indefinite relationship with an employer, an independent contractor is generally brought on to perform a specific amount of work within a finite time period;
  • Whether the employer provided the worker with training to perform the job;
  • How the worker is compensated. Contractors generally bill by the hour or receive a flat fee, whereas employees often earn an hourly wage or a salary determined by the employer; and
  • Whether the employer provides benefits like sick days and paid vacation time to the worker. Generally, contractors do not receive these benefits.

What to Do if you are Misclassified at Work

If you find you are misclassified as an independent contractor, you need to have the classification changed to reflect your actual employment status. When you are misclassified at work, you are being denied certain rights, including your right to take legal action to rectify violations of these rights.

The most important step to take is to discuss the misclassification with your supervisor and your company’s Human Resources department to have the misclassification corrected. If your company cannot or will not do this, you can report your payment as wages, rather than self-employment income on a Schedule C form when you file your taxes. You can also submit Form SS-8 to have the IRS investigate your status and determine your true classification.

Work with a Premier New Jersey Misclassified Workers Attorney

Before taking an action like filing Form SS-8, start working with an experienced employment lawyer to ensure that your rights are protected. Contact our team at The Sattiraju & Tharney, LLP today to start working with us. We are one of New Jersey and New York’s premier employment law firms.