Employers who misclassify employees as independent contractors are breaking the law. It’s a growing problem in the “Gig” economy and the consequences can be expensive, complicating the worker’s ability to recover money for a work-related injury. While legal recourse is available, it does take time to recover benefits.
Misclassification & Workers’ Compensation
Employee rights are governed by federal and state law. These rights include minimum wage, overtime pay, Social Security contributions, and Medicare. However, freelancers and independent contractors are not entitled to the benefits that employers are required by law to provide.
These are expensive and employers who misclassify employees as independent contractors often do so to save themselves money. Individuals who are misclassified are not entitled to receive workers’ compensation benefits. This means they are solely liable for medical expenses, hospital bills, diagnostic testing, and rehabilitation expenses. For workers who believe they are covered, this can create some nasty and expensive surprises if they are injured while performing their duties.
The Benchmark of an Employee
Individuals are employees in the eyes of the law if they meet certain criteria. The individual is required to follow guidance and instruction from a supervisor. Employees are also required to provide regular reports to the employer regarding projects they are working on.
Employees also receive training from an employer, must request vacation/sick leave, and are not generally in a position to receive a profit or suffer a loss from their labors. Employees, like independent contractors, can work from home or anywhere in the world. In the 21st century, having a presence in the office, work site, or manufacturing facility is not a requirement to be classified as an employee.
Conversely, freelancers and independent contractors do not have to follow instructions, can hire substitutes without authorization, and can realize a profit or loss from their labors. They may “quit” without notice, work for multiple parties, and pick and choose work that they will and won’t do.
There are many nuances to employment law and worker classifications. It is these nuances and interpretations of what is and isn’t an employee, that have led to an increased rate of worker misclassification in the United States. As such, it is crucial to discuss these with a workers’ compensation lawyer.