Benefits You Might Have Missed Out On If You Were Called an Independent Contractor

The term “independent contractor” is thrown around pretty loosely these days. Companies have always tried to get out of paying their employees fairly and providing them with reasonable benefits. But with the new surge in the gig economy, companies have found ways to get around calling you an employee, and that means you could be missing out on benefits to which you are entitled.

What is worker misclassification?

There are a lot of ways worker misclassification can prevent people from getting the appropriate pay and benefits. Worker misclassification happens when a company mistakenly or fraudulently claims that you do not have, nor are entitled to, employee status.

Different companies and industries call it different things, but here are some of the most common terms you’ll hear these companies use:

  • Independent Contractor: This is most general, and most commonly used, of these terms. This truly simply means that you are not an employee.
  • Independent Sales Representative: This term is a favorite among MLMs and other product commission based sales.
  • Subcontractor: This term is most often used in the construction or home services industry.
  • Gig worker: This is also a very general term like independent contractor, but it is much newer and trending among younger generations.

While these are all valid worker classifications, they are often used inappropriately. 

How can you tell what your worker classification should be?

This is a very common question, and it is a very complex one. Going by the IRS worker classification definitions is best, but those can be hard to navigate. There are some online tools that can help. But if you have any question about whether or not you are an employee and may have been denied benefits, you should check with our experienced attorneys first.

You may be misclassified as an independent contractor if:

  • The business could not function without the work you provide.
  • There must be a clear opportunity for profit/loss for the worker.
  • Your “client” dictates what hours you must work and what tasks you should complete during those hours. If you’re told when you can take time off and have to get it approved, you are definitely an employee.
  • The business exercises any control over the worker.
  • Being paid on an hourly basis doesn’t necessarily mean you are an employee, but it is a pretty good indication you should question your employment status.

Basically, being an independent contractor is no different than owning a business. You are in charge of your own business, your own time, and your own finances, with no input from your clients or customers.

Why does it matter how you are classified?

Worker misclassification hurts these individuals in a number of ways that they might not even be aware of. If you are classified as an independent contractor, gig worker, etc., you are not given the same considerations and protections as employees. 

Some of the protections that don’t apply to independent contractors include:

  • Minimum wage: If you aren’t working by the hour, the minimum wage laws don’t apply, regardless of how much time it takes to complete the task or project.
  • Overtime pay: If you aren’t being paid on an hourly basis, you can’t charge for overtime. Anytime you are paid on an hourly basis, you should question whether you may be an employee.
  • Unemployment insurance: If you find yourself without income, you aren’t going to be eligible for unemployment if you weren’t considered an employee. This has been adjusted a few times in recent months due to the pandemic, but it is unclear how this might work going forward. It may be some time before we have clear answers.

If you have any questions about whether or not you are an employee and are being denied required benefits, contact us today for a consultation to determine if you have a case.