One issue that is more common than most people realize is the problem of employee misclassification. When a worker is accidentally or intentionally misclassified, it can have a significant impact on their legal protections, their compensation, and even potentially their tax liability. But what exactly is employee misclassification, and how can you tell if it has happened to you?
What is Employee Misclassification?
In simple terms, employee misclassification is when an employee is mistakenly classified as an independent contractor, or vice versa. Legally, an employee is under the direct control of their employer, but also benefits from a number of legal protections like minimum wage and anti-discrimination laws. On the other side of the equation, an independent contractor is independent from their employer, but only receives protections and benefits that are explicitly laid out in their contract.
How Might You Have Been Misclassified?
In many cases, employment misclassification is accidental, resulting from confusion over where a specific worker falls, based on the criteria laid out by the Department of Labor. These criteria can be ambiguous and unclear, so this type of confusion can happen even when employers act in good faith. However, at other times, an employer may intentionally misclassify their employees for their own economic or legal benefit.
What Are the Consequences of Employee Misclassification?
When a worker is incorrectly misclassified, the results can be incredibly serious. Employees may be wrongly denied legal protections or benefits that they would normally be entitled to under the law, or independent contractors may be denied the freedom to operate that they would ordinarily enjoy. More disturbingly, an employee who is misclassified as an independent contractor may find their employer has not been withholding Social Security taxes like they should, putting the employee on the hook for potentially thousands of dollars in taxes they didn’t know they had to pay.
How Can You Tell if You Have Been Misclassified?
The best way to tell if you have been misclassified is to speak to your employer and tell them to show you the tax documentation they filed on your behalf. If you are an employee, they should be able to show you the W-4 form that contains information on your Social Security tax withholding, while if you are an independent contractor they should have your 1099 on file. If they are unwilling or unable to show you the tax documentation they have on file, there is a chance they may have misclassified you, and you should speak to a lawyer as soon as possible.
Steven Mitchell Sack, the Employee’s Lawyer, is a New York employment lawyer with more than 44 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 stevensackatty@hotmail.com.
