Did your employer intentionally misclassify you as a contractor?

According to the Internal Revenue Service (IRS), millions of workers in the United States get misclassified as independent contractors by their employers. They do so to dodge federal and state employment tax payments and lower their labor expenditures.

Make no mistake — workers suffer real harm from intentional misclassification, as the nation’s labor leaders always stated.

How workers lose through misclassification

When workers get misclassified as independent contractors, they get none of the workplace protections other employees enjoy, including:

• Ineligibility for worker’s compensation and unemployment benefits
• No right to join unions
• Larger tax burdens
• Forgoing overtime wages

There are also other ramifications to municipal, state and federal government entities due to the loss of revenue from taxes.

How to tell if you were misclassified

True independent contractors have near-total control over their work process. They can enter into agreements with employers but are not subject to a company’s control.

It can be challenging to identify a worker’s true status with a company. But the IRS developed a test with factors that determine that status for most workers. To wit:

• Behavioral – Is the worker trained by the company? Must they follow company regulations regarding how their work is carried out?
• Financial – How is the employee paid? Do they have reimbursable expenses? Who supplies their tools, uniforms and other equipment necessary for performing the job?
• Relationship – What about benefits like health insurance, pensions or paid time off? What is the wording of their contract? Is the work they perform integral to the company’s business?

Determining the answers to these and other questions can help ascertain worker misclassification is taking place on your job.