Are You an Employee or a Contractor? (In Other Words, Is Your Boss Ripping You Off?)

Misclassifying an employee as an independent contractor cheats workers out of wages and employee benefits.

Are You an Employee or a Contractor? (In Other Words, Is Your Boss Ripping You Off?) Photo (cc) by Elvert Barnes

Some employers are purposefully misclassifying workers as independent contractors – not employees – cheating them out of earned wages and employee benefits in an effort to save their businesses money.

According to the U.S. Department of Labor, worker misclassification takes a toll on everyone, not just the worker. It says:

Misclassified employees are often denied access to critical benefits and protections – such as family and medical leave, overtime, minimum wage and unemployment insurance – to which they are entitled. Employee misclassification also generates substantial losses to the Treasury and the Social Security and Medicare funds, as well as to state unemployment insurance and workers’ compensation funds.

Independent contractors are responsible for paying their own Social Security and Medicare taxes, among other things. However, not everyone can be considered a contractor.

“While rules differ across states — some require the “employer” to prove its contractors are truly independent, for example, and others don’t — the Internal Revenue Service has guidelines that should send up red flags if you’re being treated like an independent contractor when you shouldn’t be,” The Washington Post said.

McClatchy Newspapers recently completed an investigation on worker misclassification called “Contract to Cheat.” According to the report, worker misclassification is costing taxpayers billions of dollars each year. What’s more, “when it comes to public projects, government regulators have done nearly nothing about it, even when the proof is easy to get,” the report said.

So, are you a contractor or an employee? The Post said answering a few questions should help you figure that out.

  • Where do you get your work orders? Chances are, if a company is telling you what to do and how to do it, you’re an employee. “Training in particular methods, wearing company uniforms, and being told where to buy materials are all characteristics of employment, not contracting,” the Post said.
  • Can you refuse an assignment or work for another employer? “Signing exclusivity contracts, or being turned down for further work because you pass on a job, is a sign that you’re probably an employee,” the Post said.
  • Who pays your expenses? Contractors pay for their own expenses, like gas and vehicle maintenance.

Have you ever been misclassified at work? Share your comments below or on our Facebook page.

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