Employee Status vs Independent Contractor
Not all people who perform work for a company are considered “employees.” Instead, they may be classified as independent contractors. However, just because an employer classifies a person as an “independent contractor” does not necessarily mean the person is actually an “independent contractor” according to the applicable law. Whether a person is an employee or independent contractor usually depends on the kind of work the worker performs and how the employer supervises that work. Employers sometimes mislabel workers as independent contractors when they are actually employees which results in decreased payroll taxes and no wages withholdings. Employers are also not liable for payments under workers’ compensation, unemployment insurance, disability insurance, or social security for independent contractors.
Benefits of Being Considered and Employee
Employees are protected by state wage and hour laws (e.g., minimum wage, meal break periods), workers’ compensation, unemployment insurance, disability insurance, and social security among other protections. Employees can also seek assistance from state agencies to enforce the rights provided by these laws. For example, if an employer pays less than minimum wage, an employee can file a claim with the Labor Commissioner. Independent contractors, on the other hand, are not protected by wage and hour laws, workers’ compensation, unemployment insurance, disability insurance, or social security. Also, independent contractors are unable to turn to most state agencies for assistance, but instead have to go to court to settle contract pay disputes or enforce other rights. Kletter Law can assist you in proceeding with any claims you have.
Determining the Correct Status
There are a number of factors to determine if a worker is an independent contractor or an employee. All the factors are considered together in making the determination. Some of these factors are:
- the employer can fire you, or you can quit, without good cause and without notice
- the employer exercises complete control over the way in which a worker completes a job (how, when, and where they do the work)
- the employee generally works under extensive supervision
- the employee is trained by the employer to do a job in a certain way and may work with experienced employees to learn the job, or attend courses or meetings
- the work is part of the day-to-day operation of the business and the work is coordinated closely with that of other people in the business, and the success of the business depends upon that work being done; for example, a secretary is probably an employee because his work is coordinated with one or several bosses and other secretaries, while a plumber hired by a restaurant to fix the bathroom is probably an independent contractor because during and after that task, the plumber is likely to have little or no required interaction with any of the other employees (waitresses, cooks, etc.)
- the work is assigned to the employee, and the employee cannot hire assistants to perform the work
- the employee works for the employer year after year instead of finishing a job when the contract ends
- the hours are set by the employer or the employee works full time instead of finishing a job when the contract ends
- the employee have to work at the employer’s office, or at another site designated by the employer
- the employer sets the order in which the employee must do certain tasks, particularly if the same results could be achieved by doing the tasks in a different order
- the employee is paid on set dates in regular amounts
- the employer provides tools and materials needed to complete work
- the employee usually only works for one employer instead of several firms at the same time
- the employee’s services are generally available only to one employer and not to the general public
- the employee believes she is an employee
- the employee is part of the employer’s business and does not offer services separately from the employer
- the employee performs tasks that do not require extensive skill or expertise
If an employer has been treating an employee as an independent contractor the employee may be entitled to recover back wages, collect unemployment insurance, have social security withheld, and also recover interest, penalties, attorneys’ fees and costs.
It can be difficult to determine whether someone is an employee or an independent contractor and this is typically determined by the jury or judge, because it is a question of fact, not law. We can help you in determining status and in processing claims.