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Employee Misclassification Lawsuits

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What Is Employee Misclassification?

Employee misclassification occurs when an employer fails to properly identify a worker as either an actual employee or an independent contractor. Identification of a worker as either an employee or a contractor can have significant differences in the type of pay and benefits that the person receives. Misclassification occurs when the employer treats a hired employer like a contractor, or vice-versa.

Generally speaking, full-time employees may be entitled to benefits such as overtime, sick leave, and worker’s compensation. Independent contractors are generally not entitled under law to receive these from the entity they are providing services to, unless they include such provisions in their contract. 

What Is the Difference between an Employee and an Independent Contractor?

According to IRS guidelines, “employees” include any people who perform services for the employer in a situation where the employer can control the work to be done, as well as how it will be done. In contrast, independent contractors are defined as working in situations where the employer can control the result of the work, but not the methods or means in which the work is to be accomplished. In other words, independent contractors have more freedom to complete the work in their own way.

This difference can sometimes be hard to distinguished and may be viewed as somewhat subjective. When analyzing misclassification cases, IRS and other authorities employ what is called the “twenty-factor test,” which helps to determine a worker’s classification. This can include factors such as the supplying of tools to complete the job, degree of control over work projects, and benefits available to the worker.

What Are Some Common Employee Misclassification Disputes?

Some common employee misclassification disputes involve:

Depending on the nature of the dispute, a lawsuit may be necessary to resolve the issue. This may lead to a damages award, often to compensate the worker for lost wages, benefits or other losses. Alternatively, the worker may be required to return benefits or wages if they were not entitled to them. Some disputes may require investigation from a government agency such as the Wages and Hour Division (WHD) of the U.S. Department of Labor.

Do I Need a Lawyer for Help with an Employee Misclassification Lawsuit?

Employee misclassification can often lead to major legal issues and can result in significant losses for a worker. You may need to hire an employment law attorney in your area if you need assistance with an employee misclassification lawsuit. Your lawyer can help review your claim to determine what your legal rights are, and whether you might be owed any damages. Also, your attorney can be on hand to represent you during court meetings.

Photo of page author Jose Rivera

, LegalMatch Legal Writer

Last Modified: 05-02-2018 08:29 PM PDT

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