ILLEGALLY CLASSIFYING EMPLOYEES AS INDEPENDENT CONTRACTORS
Employers have a motive to improperly classify employees as independent contractors. Unlike employees, independent contractors are not entitled to overtime pay or minimum wage. Also, employers are not required to pay payroll taxes, reimburse the worker for business expenses, provide workers compensation insurance and they are not responsible for making payments to social security, disability or unemployment insurance. Companies are clearly better off if a worker is classified as an independent contractor. Workers, on the other hand, are better off being employees than independent contractors.
This begs the question - when is a worker legitimately classified as an independent contractor?
First, in most states, there is a presumption that a worker is an employee and not an independent contractor. In making the ultimate determination of whether a worker is an employee or an independent contractor, the driving factor is whether the company has control, or the right to control, the worker regarding the work being performed and the manner and circumstances under which the work is performed. If the company controls the manner in which the work is performed such as the time, place, equipment, and manages the day-to-day activities of the worker, then the worker is an employee. Depending on the case, other factors may also be considered such as:
1. Whether the work being performed is part of the regular business of the company;
2. Whether the work performed requires a special skill;
3. Whether the work is a short term temporary project or long term;
4. Whether the worker is paid by the job or based on time expended;
5. Whether the worker is engaged in a business that is different from that of the company; and
6. Whether the worker or the company owns the equipment used to do the work;
7. Whether the worker of the company provides the location or facility for the person to do the work;
These are factors that often considered in determining if a worker is an employee or an independent contractor. Even if there is an lack of complete control over the work, an employee-employer relationship will be found if (a) the worker's duties are an integral part of the operation, (b) the company has pervasive control over the operation generally, and (c) the nature of the work does not require detailed control.
Improper classification of workers as independent contractors is common and workers stand to lose benefits and overtime pay. If you believe that you have been improperly classified as an independent contractor, you should contact an employment lawyer or the Department of Labor.
