Independent contractor misclassification is a hot-button issue, and both states and the federal government are taking steps to crack down on businesses that wrongly classify employees as independent contractors. Even though there are risks, many businesses continue to classify workers in the wrong way. It is because they don’t understand the law or know how to classify workers correctly.
This blog will tell you five essential things you need to know about the misclassification of independent contractors.
1. What Is Independent Contractor Misclassification?
Independent contractor misclassification is the practice of incorrectly classifying workers as independent contractors instead of employees. It can hurt workers in many ways, like taking away their rights to a minimum wage, overtime pay, and the right to start or join a union. When someone is misclassified as an independent contractor, the state and federal governments also lose tax money.
Independent contractor misclassification is against the law in many places and can lead to heavy fines for the employer. To avoid legal problems, it is essential to classify workers correctly.
2. How to avoid Independent contractor misclassification?
In the United States, it’s a big deal when workers are wrongly called “independent contractors.” The National Employment Law Project says that as many as 30% of American workers are wrongly labelled as independent contractors at their places of work.
It indicates they are not receiving the privileges and safeguards to which they are legally entitled. They are not receiving benefits such as the federal minimum wage, overtime pay, or unemployment insurance, for instance.
The US Department of Labor says independent contractor misclassification as employees is “one of the biggest problems facing the American workforce today.”
Independent contractor misclassification is “one of the most critical difficulties facing the American workforce today,” according to the United States Department of Labor. When workers are misclassified, they don’t get the basic protections and benefits the law says they should get.
There are many safety nets and benefits, including the minimum wage, overtime pay, unemployment insurance, and worker’s compensation. When workers are wrongly labelled, they don’t get the minimum wage.
You can do a few things to avoid Independent contractor misclassification.
- First, ensure you know the difference between an employee and an independent contractor.
- The second thing you must do is ensure that every worker has a written contract that defines how you will work together.
Independent contractor misclassification can have significant effects.
For the employer, there may be federal and state tax implications and potential liability for employment-related claims like workers’ compensation, unemployment insurance, and wage and hour violations.
Some of the employee’s rights and protections could be taken away, such as the right to overtime pay, the right to form or join a union, and the right to certain benefits.
4. If independent contractors are misclassified, they could also lose some government benefits.
Employees incorrectly classified as independent contractors due to Independent Contractor Misclassification risk being disqualified from receiving essential government benefits such as unemployment insurance and workers’ compensation. It can be a significant financial burden for workers, especially if they lose their job or get hurt and can’t work.
Independent contractor misclassification of employees can also cause trouble for businesses. For instance, if an employee gets hurt on the job and it turns out that the business misclassified them, the business may have to pay workers’ compensation and other damages.
Businesses should be careful to classify their workers correctly to avoid these problems.
5. How to Deal with an Independent contractor misclassification Claim?
If you were misclassified as an independent contractor when you were an employee, you could do a few things to handle the claim.
Your first action should be hunting for evidence to support your assertion. Documents such as pay stubs, contracts, and emails may get included in this category. After gathering all this material, you need to speak with an independent contractor lawyer. They can guide you through the procedure and assist you in completing the necessary documents.
In addition, you must ensure that you are prepared to file a claim with the Department of Labor. It will initiate an investigation into what took place and assist you in obtaining the money that is rightfully yours.
An expensive mistake might get made if an individual suffers from Independent Contractor Misclassification. If you aren’t sure if a worker is an employee or an independent contractor, you can visit Pacific Attorney Group – Employment Law or call us at (213) 486-3084 for a free consultation. You can protect your business by knowing the risks of misclassification.