Employee misclassification occurs when employers fail to properly classify a worker as either an independent contractor or an employee. The identification of a worker as either an employee or an independent contractor can have a significant effect on the pay and benefits that the person receives.
Employee misclassification occurs when an employer treats a hired employee as an independent contractor or vice versa. In general, a full-time employee may be entitled to benefits including:
- Overtime pay that should be at least 1.5 times their regular hourly pay
- Hourly pay that is at least as much as the federal minimum wage
- Eligibility for worker’s compensation
In addition, employees are often entitled to receive employer-provided fringe benefits such as health insurance and retirement savings plans.
An independent contractor is generally not entitled to receive these benefits from the businesses to which they provide their services unless provisions stating otherwise are included in their contract.
What Is the Difference Between an Employee and an Independent Contractor?
According to the guidelines provided by the Internal Revenue Service (IRS), an employee includes any person who performs services for an employer in a situation in which the employer can control where the work is to be done as well as how it is done.
An independent contractor, in contrast, is defined as working in a situation where the employer can control the result of the work but not the method or means by which the work is completed. In other words, an independent contractor has more freedom to complete their work in their own way.
It may sometimes be difficult to distinguish between an employee and an independent contractor, and the difference may be viewed as somewhat subjective. When analyzing cases of employee misclassification, the IRS and other authorities will employ what is called the 20-factor test. This test assists them in determining a worker’s proper classification.
This test includes the following factors:
- Instructions: Independent contractors direct themselves, whereas employees are given instructions
- Training: Employees are told to do things by a specific method or procedure, whereas independent contractors are not
- Integration: The services of employees are integrated into the company’s operations, not separate from them
- Services Rendered Personally: Independent contractors often delegate duties to subcontractors rather than doing the work themselves
- Hiring, Supervising, and Paying Assistants: Independent contractors can hire their own assistants
- Continuing Relationship: An employee’s relationship with the company is ongoing, whereas an independent contractor may never work for the same employer twice
- Set Hours of Work: independent contractors make their own schedules
- Full-Time Work: Employees generally work full-time, whereas independent contractors often work part-time
- Work Done on the Employer’s Premises: Employees work on-site, whereas independent contractors can work wherever convenient or necessary
- Order or Sequence of Work to be Done Set by the Employer: Independent contractors can decide how work is done so long as it is finished according to the contract, whereas employees must complete their work according to the direction of their employer
- Oral or Written Reports: An individual who must report to their employer on a regular basis is an employee
- Payments: Employees are paid biweekly or monthly, whereas independent contractors are paid by the job completed
- Expenses: Employees’ business expenses are often covered by the company, whereas independent contractors must cover their own
- Tools and Materials: An independent contractor will usually provide their own tools and materials needed to complete their work, whereas an employee will use their employer’s
- Investments: Independent contractors make personal investments in equipment, advertising, etc., whereas employees use equipment that belongs to their employer
- Profit or Loss: An employee’s work will not generally change their pay, while an independent contractor’s may
- Works for More Than One Person or Firm: If an individual works for more than one person for a firm, this is a good indicator that they are not an employee
- Services Available to the General Public: An independent contractor makes their services available to the general public
- Right to Fire: An independent contractor cannot generally be fired unless they have not performed up to the standards of their contract or according to the terms of their contract
- Right to Quit: An employee can quit at any time, whereas an independent contractor is legally obligated to finish whatever work was agreed upon
What Are Some Common Employee Misclassification Disputes?
There are several different common types of employee misclassification disputes, including the following:
- Wages, especially the method and timing of payment, such as regular wages vs. payments only after completion of a project
- Overtime pay disputes
- Paid sick leave, medical leave, and disputes relating to other other benefits of employment
- Workers’ compensation
- Income tax and Social Security withholdings
Depending on the nature of a dispute, a lawsuit may be required to resolve the issue. This may lead to an award of damages, often used to compensate the worker for lost wages, benefits, and other economic losses that a worker suffers.
In the alternative, the worker may be required to return benefits or wages if they were not, in fact, entitled to them. Certain disputes may require investigation from a government agency, such as the Wages and Hour Division (WHD) of the United States Department of Labor.
How Much Can I Sue an Employer for Misclassification?
It can be helpful to talk to an employment contract attorney for any employment misclassification issues a person may be facing. Employee misclassifications can lead to certain legal problems. One reason is that dealing with the IRS is different if one is an employee as opposed to an independent contractor.
An independent contractor would need to make their own tax withholdings and forward them to the IRS throughout the year, whereas an employee relies on their employer to do this.
If a person is a worker who has been misclassified, they may suffer significant losses. An employee misclassification lawyer can review a person’s situation and determine if they have been misclassified as an employee or independent contractor. They can also assist them with filing a lawsuit to resolve the issue, if necessary.
If a person is an employer, a lawyer can help them make sure that their employees are properly classified. There are requirements for each type of worker, and failure to comply with those requirements can result in significant consequences. A lawyer can also help an employer negotiate a dispute with an employee or a contractor, depending on the circumstances.
How Can Employment Issues Interact with Immigration Issues?
There are employment issues that may arise related to an individual’s immigration status. Workplace discrimination and immigration discrimination are examples of these issues.
Workplace discrimination is related to the worker’s immigration status. Immigration discrimination is related to unfair treatment or prejudicial treatment based on their immigration status, protected status, or national origin.
Workers may also face national origin discrimination, which is unfair treatment because of being from a specific country, appearing to be from a specific ethnic background, or having a specific accent or ethnicity. Discrimination based on citizenship status occurs when a worker is unfairly treated due to their citizenship or immigration status.
The Immigration and Nationality Act (INA) is an immigration law that applies broadly to many different immigration issues, including employment issues. There are many discrimination, employment, and immigration laws that apply to employment and immigration situations.
There are also executive orders that may be signed by presidents that can update, change, or even reverse existing laws and policies. Executive orders that may apply to to immigration issues and employment issues include:
- Executive Order Protecting the Meaning and Value of American Citizenship
- This order ends birthright citizenship
- This is when a baby born in the United States is automatically provided citizenship
- This may be referred to as anchor baby status, although this term may be considered controversial
- Under this order, one parent must be a citizen of the or a permanent resident of the U.S. for the child to be given birthright citizenship
- The child born is not provided birthright citizenship if their parent is in the United States on a temporary visa
- This order is not currently in force due to a legal injunction
- Executive Order Protecting the American People Against Invasion
- The order lays out information and policies about enforcement of deportation or removal, unlawful presence for those unlawfully present, and enforcing illegal entry
- It expands expedited removal
- Executive Order Realigning the United States Refugee Admissions Program (USRAP)
- Limits the ways applicants are allowed to enter the U.S.
- Applicants are allowed on a case-by-case basis
- Suspended pending further evaluation
- Executive Order Guaranteeing the States Protections Against Invasion
- People cannot enter the U.S. at the southern border
- The Department of Homeland Security (DHS) and the Secretary of State can allow applicants on a case-by-case basis
All of these laws can be updated and changed at any time. Because of the many different laws that can apply and the potential for them to be updated at any time, it is essential to have an attorney help with immigration and employment cases, questions, and issues.
What Can Happen if Someone Overstays a Temporary Work Visa?
If an individual overstays their work visa, they may lose their legal status. This can result in deportation and a voiding of their visa.
In addition, the individual can be banned from future re-entry, from three to ten years. The individual may also have issues getting a visa in the future, they can be detained by Immigration and Customs Enforcement (ICE), and the penalties they may face can increase the longer that they stay unlawfully.
ICE has the right to detain individuals who are suspected of being illegal immigrants or breaking immigration laws. A suspect can be held for 48 hours without a warrant, after which time they must release the suspect or start deportation procedures.
It is important to note that, if someone cannot be returned to their country of origin, they may be detained indefinitely. If this occurs, the individual being detained can request a writ of habeas corpus, allowing them to challenge their detainment in court.
When a suspect is interacting with ICE, they have some rights similar to those that criminal defendants have. For example, they can invoke the right to remain silent when asked questions about their immigration status.
A suspect can also decline to provide consent when asked by an ICE agent to allow a search. These rights are given under case laws that hold that people have these rights under the Fourth and Fifth Amendments, including in immigration contexts. It is also very important to ask for a lawyer to review any documents provided by ICE before signing them.
Individuals who are in the United States on visas, including employment visas, to be aware of the consequences of overstaying those visas as well as their rights when they interact with ICE.
Do I Need a Lawyer for Help With an Employee Misclassification Lawsuit?
It is essential to have the help of an employment attorney for any employment misclassification issues you may have.
If you think you have been misclassified, LegalMatch.com can connect you to a lawyer who can review your situation. They will determine if you were misclassified as an employee or independent contractor and assist you in trying to resolve the issue, if that is the best way forward.
If you are an employer, having the assistance of a lawyer can help you properly classify your employees. Your lawyer can also help you defend a lawsuit if you are sued by a worker or government agency and represent you at any court appearance.
The lawyer-client matching services provided by LegalMatch are free for you to use. It will only take you around 15 minutes to complete the online process of submitting your employee misclassification concern or issue as well as any related employment issues.
Licensed and prescreened employment lawyers in your area will respond to your submission in around a business day. These responses will include information about each lawyer’s education, background, fees, and reviews from clients. Get started today using the free attorney-client matching services provided by LegalMatch.
