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Employment Law and Misclassification as an Independent Contractor

Independent contractors and employees present themselves as similar and mistakenly, interchangeable terms for two distinct types of workers. Generally, independent contractors likely work for themselves and do not experience the withdrawal of taxes from entities they provide services to. However, employees’ earnings must undergo adjustments from respective businesses to cover taxes related to income, Social Security, Medicare, and unemployment.

Should business owners negligently misclassify an employee as an independent contractor, serious implications follow that affect both the government and workers concerned. When a business misclassifies you as an independent contractor, the business unlawfully:

  • Denies unemployment insurance and workers’ compensation for extenuating circumstances, including layoffs and work site accidents.
  • Fails to withhold income taxes, often subjecting workers to financial hardship in the face of costly tax bills.

If you believe that your employer misclassifies you as an independent contractor, depriving you of the above benefits, consider taking the following actions:

  • Contact the California Department of Industrial Relations. Individuals who report suspected misclassification are kept anonymous, and reports meriting further review should result in an investigation led by the proper state entity.
  • Wages serve as a key indicator of misclassification. If you work overtime and receive inadequate compensation, or if your earnings amount to less than minimum wage, report violations to the U.S. Department of Labor Wage and Hour Division.
  • When businesses fail to withhold taxes, they commit tax fraud. Workers may determine their status as an employee versus an independent contractor through the Internal Revenue Service’s Form SS-8. However, unlike the other entities mentioned, the IRS does not keep workers’ identities anonymous. Therefore, misclassified workers should consult experienced legal counsel for proper recourse.

At the Spencer Law Firm, our legal team strives to ensure fairness in pay and benefits allotted to workers based on lawful classification. If you, a friend, or family member experiences or experienced misclassification as an independent contractor, contact us to discuss your options.