There are plenty of advantages to being an independent contractor. Still, the majority of the U.S. workforce prefers the steady income and other benefits that come with being a paid employee.
Unfortunately, many employees are misclassified as independent contractors, and it’s costing them more than just money.
Why proper classification matters
Employee misclassification occurs when a worker is incorrectly designated an independent contractor. It can happen accidentally, but some companies purposely misclassify their workers. As an employee, you have rights and protections under the law, including:
- The right to benefits such as health insurance, paid time off and retirement plans
- Wage and hour protections, including overtime pay and minimum wage standards
- Unemployment benefits if you lose your job
- Payment of the employer portion of Social Security and Medicare taxes
Independent contractors don’t have any of those protections. In addition, they need to pay both the employee and employer portions of their taxes.
Many states use the ABC test to determine classification. A worker is considered an employee unless the employer can prove the following:
- Absence of control: The worker is free from the employer’s control and direction in performing their job.
- Outside business: The work performed is outside the usual course of the employer’s business.
- Independent trade: The worker is engaged in a trade that is of the same nature as the job being performed.
If the worker fails to meet any of these three criteria, they may be classified as an employee.
To determine if you’ve been misclassified, consider the following questions:
- Does your employer set your schedule?
- Are you paid hourly or salaried?
- Do you receive employment benefits like health insurance or paid time off?
If you answered “yes” to most of the questions, you are likely an employee. However, if you answered “no”, discuss your concerns with your employer. They may not be aware of the error. If you continue to experience employee misclassification or you face retaliation, contact a legal representative. They can help you understand your rights and explore your options to receive the compensation you deserve.
