Independent Contractor or Employee? How the ‘Gig Economy’ May Strip Workers of Legal Protection
Don’t let misclassification prevent you from exercising your rights
You’re part of the “gig economy”—working on a freelance or contract basis like the more than 23 million other Americans.
If you’re an independent contractor by choice, you probably enjoy the increased flexibility and independence that your work situation allows.
However, if you’re a contractor because a company you work for won’t hire you as a full-time employee, you probably have a lot of questions. You may wonder if you’re being cheated out of the benefits and legal protections that come with being classified as an employee.
Shouldn’t you find out?
Remember, companies look after their own interests and you should do the same. Let’s discuss what you need to know about classification.
Why Misclassification Works for Companies
It’s extremely beneficial, financially and practically, for companies to classify workers as independent contractors rather than employees.
Why is that? Independent contractors cost less.
If you’re a freelancer, temp, or other non-employee, employers don’t have to worry about employer-sponsored health care, overtime compensation, paid time off, family and medical leave, participation in retirement plans, and unemployment compensation.
That’s why some workers find themselves denied employee status, while performing generally the same duties and being held to the same rules as regular company employees.
Have You Been Misclassified?
The good news is that there is a legal basis for determining employee status. That is, employers can’t simply deem some people employees and others contractors.
The U.S. Department of Labor (DOL) has created a framework to help determine classification as an independent contractor or employee.
There are six points to consider.
First, if the work you perform is integral to the company’s business, it’s more likely that you are economically dependent on the employer and therefore less likely to be an independent contractor, i.e., in business for yourself.
Second, if your managerial skills impact your profit and loss, you may be an independent contractor.
Third, if you have invested in facilities or equipment, or hire other workers or subcontractors— so that you are sharing some of the risk of doing business— you may be an independent contractor.
Fourth, if based on your special skills, you exercise independent business judgment in the course of your work— that may indicate you are an independent contractor. If you are in open market competition with other gig workers and operating an independent business, as opposed to being economically dependent on the company, that would suggest independent contractor status.
Fifth, the permanency or duration of your relationship with the company impacts your classification as an independent contractor or employee. Indefinite, short-term, temporary or project-based work may indicate independent contractor status. Performing work on an ongoing and steady basis over a longer time period may indicate employee status.
Sixth, the nature and degree of control by the company factors into whether you are an employee or independent contractor. In general, if the employer does not control how you perform the job, and you make independent decisions, you may be an independent contractor.
In order to be classified as an independent contractor, you, as the worker, must control the working relationship itself. Consider:
• Who sets the amount of pay and work hours?
• Who determines how the work is performed?
• Who decides whether you are free to work for others and hire other workers to help perform the job?
Contact Us for a Free Consultation
Remember, even if you signed an agreement stating that you are an independent contractor, that may not be the end of the story. Rather, the working relationship between you and the company is the determining factor.
If you believe you’ve been misclassified as an independent contractor, you’re probably being denied rights and benefits that you may be entitled to under the law.
Email us at email@example.com or call (267) 273-1054 for a free consultation.