According to the New York State Department of Labor, there have been more than 31,000 employee misclassification cases in the state since 2007. While this is sometimes the result of an honest mistake, some employers will intentionally misclassify their employees as independent contractors, resulting in serious legal and financial problems. But why might an employer intentionally misclassify someone as an independent contractor?
What is Employee Misclassification?
Put simply, employee misclassification is when an employer treats an employee as though they are an independent contractor, or vice versa. Generally, this means filling out the wrong paperwork for them, doing taxes incorrectly for them, and failing to give them the benefits or protections they would normally be entitled to. This can be especially problematic for any employees who are misclassified as independent contractors, since they may find themselves personally liable for taxes they thought would be paid by their employer.
What Makes an Independent Contractor Different From an Employee?
On a basic level, the distinction between an independent contractor and an employee is this:
- An employee is someone who the employer has direct control over, but is personally responsible for and has legal obligations to.
- An independent contractor is someone the employer has no direct control over, but which they have little to no responsibility for, and no obligation to.
As a general rule, the more control an employer exercises over their worker, and the more dependent that worker is on the employer for things like facilities and equipment, the more likely they are to be an employee than an independent contractor. However, when there is a dispute, the court will weigh a variety of factors to determine which classification is more appropriate.
Why Would an Employer Intentionally Misclassify a Worker?
Some employers will deliberately misclassify an employee because, quite simply, employees are more costly to them than independent contractors. For example, employers are responsible for withholding Social Security taxes for employees, and must pay half the taxes themselves, while independent contractors are 100% responsible for their own Social Security taxes. In addition, if an employee hurts someone else while they’re on the job, the employer will likely be responsible for any ensuing lawsuit, while if an independent contractor does it, they bear the cost of that litigation themselves. This, combined with employees benefiting from a variety of legal protections (such as mandatory sick and vacation time, as well as anti-discrimination laws) that independent contractors do not, means that dishonest employers can save a lot of money by misclassifying their employees.
What Should You Do if You Have Been Misclassified?
If you believe you have been misclassified, you should speak to your employer and ask for your W-2 form. If they fail to provide that form, or instead provide a 1099 form (used for filing taxes as an independent contractor), there is a good chance that you have been misclassified. In that case, you should speak to a lawyer with experience handling employee misclassification cases, who can help you to correct the issue and obtain compensation for any harm you have suffered.
Steven Mitchell Sack, the Employee’s Lawyer, is a New York employment lawyer with more than 41 years’ experience handling the many aspects of employment law. His new book, “Fired!: Protect Your Rights & FIGHT BACK If You’re Terminated, Laid Off, Downsized, Restructured, Forced to Resign or Quit,” is available in hardback, and contains valuable advice on dealing with employment and labor law issues. To purchase the book, feel free to contact Steven Sack at 917-371-8000 or visit the website at legalstratpub.com. To inquire about a legal matter, please feel free to contact attorney Steven Sack at 917-371-8000 or firstname.lastname@example.org.