Introduction
Workers who are classified as independent contractors are cut out of a host of Federal workplace protections, such as anti-discrimination statutes, the right to unionize, and wage and hour laws. It’s easy for employers to misclassify workers because the definition of “independent contractor” is hard to pin down – it varies from statute to statute, and even from state to state. But workers who understand the distinction between being an independent contractor and being an employee are empowered to fight misclassification and win the protections they are entitled to. Here are some guidelines:
- Understanding the Basics
An independent contractor is considered to be self-employed, while an employee is employed by the employer (try saying that ten times fast.) Workers suffer a tremendous amount of harm when they are misclassified as independent contractors. So it’s important for every worker to understand how they are classified and why.
Don’t try this at home. This is a complicated inquiry, so always contact an experienced workers’ rights attorney in your jurisdiction before making any big decisions.
Courts and agencies, when deciding whether a worker is an independent contractor or an employee, tend to look at a list of factors to make their determination. Complicating the inquiry, different courts and agencies look at different factors. Generally speaking, the underlying question is how much control the employer has over what, how, and how much the worker does. Decisionmakers will look at things like whether the employer sets the work schedule, whether the worker is allowed to engage in work for other companies, who sets the worker’s wages, whether the worker receives benefits, and whether the worker can refuse tasks. The more independence, the more likely the worker is legitimately an independent contractor.
- Why Does It Matter?
Being an employee means having workplace protections against excessive overtime, wage theft, sexual harassment and discrimination, safety violations, and a host of other exploitative practices. It can also mean eligibility for benefits such as health, disability, and life insurance; participation in retirement plans, and paid time off. From a tax perspective, taxes on a W-2 are much simpler than taxes on a 1099.
By contrast, being classified as an independent contractor opens a worker up to exploitative workplace practices, without much legal recourse. For example, federal anti-discrimination laws do not protect independent contractors – only employees. So if an independent contractor is being sexually harassed, an EEOC complaint isn’t going to do them much good—no matter how bad the harassment is.
That said, there are some reasons a worker might choose to be an independent contractor. True independent contractors can usually control their hours of work, the type and number of tasks they’ll complete, and how they complete them.
The problem is that, if a worker hasn’t chosen to be an independent contractor, an employer’s misclassification of that worker puts the worker in a position to be exploited and injured without good legal protection. So, workers who suspect they have been misclassified should definitely seek legal counsel.
- But I Heard A Different Rule…
Some states (including New York) and municipalities (including New York City) have implemented state statutes and regulations to protect independent contractors. For example, the New York State Human Rights Law extends its anti-discrimination and harassment protections to a variety of non-employees, including vendors, interns, and independent contractors. Another example, the New York City Freelance Isn’t Free Act, requires anyone employing an independent contractor to enter a written contract which specifies the amount, rate, timing and method of compensation.
These laws form a patchwork across the nation, so something that works in New York City isn’t necessarily going to work in Buffalo or San Francisco. We’ll say it again: Don’t try this at home. Always contact an experienced workers’ rights attorney in your jurisdiction before making any big decisions.
Conclusion
Understanding the distinction between being an independent contractor and an employee is crucial for workers to protect their rights and access workplace benefits and protections. Some states and municipalities have implemented laws to protect independent contractors, but these laws vary, highlighting the need for professional guidance in navigating worker classification. Because the definition of “independent contractor” can vary, it is easy for employers to misclassify workers. Therefore, workers should seek legal counsel if they suspect they have been misclassified.
