Am I an independent contractor or employee?
Are you really an independent contractor? According to the Department of Labor, most workers are, in fact, “employees”. Faced with constant pressure to cut costs, many companies have in recent years turned to the use of “independent contractors” to perform specialized or irregular work. The practice has become so common that many workers are misclassified as independent contractors, losing compensation and benefits to which they are entitled under the law.
Though employers welcome the savings, the cost to individual workers can be huge.
Because there is no fixed definition of an independent contractor, courts must review several factors when considering cases. These factors we’ll discuss later, but the important consequences of improperly classifying a worker as an independent contractor can include denial of minimum wages, overtime compensation, health and retirement benefits, workers’ compensation, unemployment insurance, and more.
While the misclassification of workers as independent contractors occurs across various industries and job positions, there are a few specific occupations in which it is extremely common:
- Construction workers
- Exotic dancers
- Hair stylists
- Healthcare workers
- Landscaping/Maintenance crews
- Nail salons
- Staffing agencies
- Start-up companies
The mere use by an employer of an IRS Form 1099 is not dispositive as to whether an individual worker is an independent contractor rather than an employee. Generally, there are six key factors that courts consider when determining whether a company has improperly classified a worker.
Courts look at several factors when determining whether someone is an employee or independent contractor, including:
- The duration of the working relationship.
- The worker’s independent investment in tools and materials.
- The degree of direct control that the employer has over the worker.
- The worker’s equity in the business, or opportunity for profit and loss.
- The degree to which the worker’s role is a vital part of the employer’s business.
- The extent that specialized skills or independent initiative are necessary to complete the work.
There is no single factor that makes the difference. Rather, courts must consider all facts related to the working conditions and the individual’s relationship with the company. Reviewing all the evidence in its entirety, courts then determine the proper classification. Misclassified workers may be entitled to additional benefits and compensation, including up to three years of back overtime pay and/or minimum wages.
Have You Been Misclassified as an Independent Contractor?
Seek legal advice to determine if you have been misclassified as an independent contractor. If you believe you have misclassified and are possibly owed wages in the form of backpay, then you need an experienced employment law attorney. Speak to an employee rights attorney at Wenzel Fenton Cabassa P.A., with a free initial consultation to get an in-depth look at your situation and what you can do about it.