Employment misclassification happens when a worker is wrongly labeled as an independent contractor instead of an employee. This is a serious issue because it can prevent a person from getting benefits and protections they are legally entitled to, such as minimum wage, overtime pay, workers’ compensation and unemployment insurance.
Employers may misclassify workers mistakenly, or they may do so intentionally to avoid paying taxes or following labor laws. For workers, understanding the common signs of misclassification is the first step toward protecting their rights.
When workers need to be classified as employees
Independent contractors are supposed to have freedom to decide how they complete tasks. If your employer controls how, when and where you work, sets your schedule, requires you to use company tools and closely monitors your performance, you may actually be an employee under the law.
If the work you do is central to the business, you are likely not an independent contractor. For example, if a bakery hires someone to bake bread every day, that person is likely an employee. Independent contractors usually handle tasks that are separate from a business’s core functions, such as fixing a leaky roof or designing a one-time marketing campaign.
If you are required to work long-term for only one company, that may also point to misclassification if you’ve been classified as an independent contractor. True independent contractors often work with multiple clients and have the ability to turn down jobs.
Being paid without taxes taken out is another common sign. Independent contractors usually receive full payment and are responsible for paying their own taxes. If you never agreed to be a contractor and find yourself without tax withholdings or a W-2 form at the end of the year, something may be wrong.
Misclassification can harm your finances, your health and your job security. If any of these signs sound familiar, it may be time to get experienced legal guidance to learn about your rights and options.