Is Your Employer Misclassifying you as an “Independent Contractor”?

Is Your Employer Misclassifying you as an “Independent Contractor”?

The United States Department of Labor estimates that almost one-third employers are misclassifying their employees as “Independent Contractors.” Many employees (and perhaps some employers) do not understand the differences between an “Independent Contractor” and an “Employee.”

At first, the difference in title may not seem to matter, but whether the person is an employee or an independent contractor can affect many issues like overtime wages, taxes, liabilities, and benefits.

The Fair Labor Standards Act (FLSA) mandates minimum wage and overtime wages (for hours worked over 40 in a week) for “employees.” The overtime rules of the FLSA do not apply to independent contractors since they are not employees.

Similarly many other laws that govern employer-employee relationships and provide for employee protections do not apply to independent contractors. For example, if you are an “independent contractor” instead of an employee, you do not have to be provided with benefits,

which means that you could miss out on insurance, a 401k or other retirement benefits, and paid time off, etc. Additionally, as an independent contractor you are responsible for payment of his or her own taxes, including the full payment into Social Security,

whereas an employee the employer pays half of the Social Security tax. Furthermore, if you are an independent contractor, you may be legally liable if you are sued as a result of your work, instead of your employer’s insurance policy covering the costs of a lawsuit.

Finally, independent contractors are usually not eligible for unemployment compensation, if they lose their job or for workers’ compensation if they are injured while working. Many employers misclassified as an independent contractor to employees in an effort to spend less money on wages, benefits, and taxes.

Recently, the Department of Labor has begun to crackdown on these employers. However, it is important for all workers to understand the difference between an employee and an independent contractor, so they are aware of their rights. Unfortunately, it is not always easy to determine whether you are an independent contractor,

even if you are referred to as an independent contractor. A worker’s title does not determine his or her correct classification; the important factors are the workers’ duties and how he or she goes about those duties. Importantly, there is not one single factor that determines a worker’s classification; rather

the courts will look at various different factors to determine if a worker is an employee or an independent contractor. One of the major differences between an employee and independent contractor is the amount of control that the company exercises over how a worker completes their job.

Where the company that tells the worker exactly how to do their job, the worker is most likely an employee. On the other hand, if the worker is simply told the objective but allowed to complete that objective however they see fit, then the worker may be an independent contractor.

Worker’s hours will also help to determine his or her classification. If the company sets the worker’s hours, including start time, end time, lunch time and breaks, the worker will likely be classified as an employee. In the event that the company does not tell the worker how many hours to work or when the worker should be

working, then the worker is probably an independent contractor. Finally, a worker’s work location can provide some insight into his or her classification. Some employees, like outside sales personnel, are not required to work at the company’s place of business;

however, they are still considered employees because the company controls the way they complete their duties. Independent contractors, on the other hand, have the ability to work from anywhere they choose, as long as they are able to complete the work they were hired to complete.

In certain industries the misclassification of employees as independent contractors is more rampant than other. For example, in the construction industry many construction workers are misclassified as independent contractors.

This also happens in the cable installation and other such industries. If you are classified as an independent contractor and work over 40 hours a week, you should carefully determine if you are being misclassified and being cheated out of rightfully earned overtime.

If you have any questions on this or other wage and hour issues, please contact us for a free and confidential consultation.http://prestonbrar.com/is-your-employer-misclassifying-you-as-an-independent-contractor/

Is Your Employer Misclassifying you as an “Independent Contractor”?