Employment Discrimination Blog

Saturday, April 15, 2017

The Basics of Worker Misclassification

Employees have certain rights and protections. However, independent contractors have more control over their work and do not have the benefit of many employee protections. Employers sometimes deem workers as independent contractors instead of employees because it is cheaper for them to do so. Independent contractors are not subject to specific laws, including:

  • Protection under the Family Medical Leave Act
  • Unemployment insurance
  • Safe workplace requirements
  • Overtime compensation
  • Minimum wage and hour restrictions

Many of these benefits are expensive for the employer to maintain. To avoid these extra costs, some employers classify workers as independent contractors even though they should technically be considered employees. This practice is commonly known as misclassification, and it is illegal.

Independent Contractors Versus Employees: The Control Test

It can be difficult to discern whether you are considered an employee or an independent contractor. However, there is a test that the courts use to determine if a worker should be regarded as an employee. This test is often referred to as the “control test.” Both the IRS and many states, including Georgia, use this test to determine whether a worker has been misclassified. You can do your own analysis to determine if your employer is this classifying you.

Employers have more control over their employees that independent contractors. Control is often exercised in three major ways.

  1. Behavioral:  If the employer has the right to control how the worker does his or her job and the specific tasks that the worker completes, the worker is more likely to be classified as an employee. When you can control how much or how long you work, you are more apt to be classified an independent contractor.
  2. Financial: Independent contractors often must handle their own financial aspects of their work. For example, this might include purchasing your own supplies or equipment. Employees generally use their employer’s resources. Independent contractors are often also paid based on their completed job. Employees are often paid on an hourly basis.
  3. Relationship details: Many independent contractors are subject to an employment contract, or they are retained to perform a particular job. Employees, on the other hand, often continue the working relationship indefinitely. They may also have access to certain benefits such as vacation pay, insurance, or a retirement plan. The court may also look at the possibility for the worker’s profit or loss in the relationship to determine if he or she is an independent contractor. Employees essentially have no risk, but an independent contractor may.

Independent contractors or freelancers are generally considered as owning their own business. That is, they often have more than one boss (or client) whereas employees often work full-time for one person or company.

More Than Just Words

Even if your employer classifies you as an independent contractor, that does not necessarily mean that you are. Receiving a 1099 instead of a form W-2 also does not mean that you are automatically an independent contractor. Instead, you must go through the control test to determine the actual relationship between you and your employer.

Misclassification occurs when your employer says that you are an independent contractor but the affiliation really indicates that you are an employee. Our team can help you decide whether you are missing out on valuable benefits and protections that employees receive because your employer is referring to you as an independent contractor. Call today to set up an appointment.


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