Taking a job as an independent contractor may not seem like an issue initially. Many people are eager to secure new opportunities, even if they are not direct employees. The misclassification of workers as independent contractors has become a somewhat common business practice. Organizations trying to bypass labor laws may have workers sign contracts that identify them as independent contractors instead of employees.
People who have been wrongly forced to classify themselves as independent contractors may not realize the risk involved in doing so until something goes wrong. When companies treat workers like employees but classify them as independent contractors, the workers may not receive appropriate wages. They also may not have the full workplace protections that they deserve. How can employer misclassification affect workers?
Lost income
One of the most significant issues generated by this classification is inappropriately low wages. Workers may not receive the pay that they deserve based on the time they work. Independent contractors generally do not receive overtime wages because they set their own schedules. They also do not have minimum wage protection.
Companies may pay workers so little that they ultimately earn less than minimum wage or may demand that they work 50 hours or more per week without overtime pay. Workers misclassified by their employers may be able to seek double damages for the wages they didn’t receive.
Insufficient protection
There are numerous workplace protections that apply to employees but not independent contractors. Independent contractors are typically not eligible for unemployment benefits if they lose their jobs. They also do not receive workers’ compensation coverage if they get hurt on the job.
Finally, they do not receive employer contributions towards employment taxes. Instead, they must pay all of the relevant taxes on their own behalf. Workers have to save some of their income to pay their income taxes. After their first year working as independent contractors, they also have to submit quarterly estimated tax payments or risk penalties when they file their annual tax returns.
Filing a lawsuit and proving that an employer misclassified a worker may help the worker connect with benefits they otherwise would not have received and pursue the wages that they deserve. Workers who recognize how misclassification makes them vulnerable may understand why taking legal action can be an appropriate response to illegal company practices.