Independent contractors play a vital role in the U.S. economy, providing services to businesses and individuals on a project basis. However, employers often misclassify employees as independent contractors to avoid paying benefits, taxes, and to sidestep various employment laws. As a result, independent contractors need to be wary of misclassification by their employers and understand their rights under federal and Massachusetts law.

What is Misclassification of Independent Contractors?

Misclassification of independent contractors occurs when an employer treats a worker as an independent contractor when, in fact, the worker should be classified as an employee. The main difference between an employee and an independent contractor is the level of control an employer has over the worker. Employees are subject to the control and direction of the employer, while independent contractors have control over their work, including how the work is performed.

Why do Independent Contractors Need to be Wary of Misclassification by their Employer?

Independent contractors who are misclassified as employees by their employer are often denied various benefits and protections that are provided to employees under the law. For example, employees are entitled to minimum wage and overtime pay, unemployment insurance, workers’ compensation, and other benefits that independent contractors are not eligible for.

Misclassification can also result in significant financial consequences for the worker. Independent contractors are responsible for paying their own taxes, including Social Security and Medicare taxes, as well as federal and state income taxes. When an independent contractor is misclassified as an employee, the employer is responsible for paying these taxes. This can result in the worker owing back taxes and penalties, which can cause significant financial strain.

What should an Independent Contractor do if they believe they have been Misclassified by their Employer?

If an independent contractor believes they have been misclassified by their employer, they should take the following steps:

1. Gather documentation: Collect evidence of the working relationship, including the terms of the contract, the type of work performed, the level of control exercised by the employer, and any other relevant information.
2. Review federal and Massachusetts laws: Familiarize yourself with the federal Fair Labor Standards Act (FLSA) and Massachusetts laws that govern the classification of employees and independent contractors.
3. Seek legal advice: Consult with an employment attorney to determine if you have been misclassified and to discuss your options.
4. File a complaint: If you believe you have been misclassified, you can file a complaint with the U.S. Department of Labor, the Internal Revenue Service (IRS), or the state labor department.

Massachusetts Employment Lawyer

Misclassification of independent contractors is a serious issue that affects workers across the U.S. Independent contractors who are misclassified as employees are often denied the benefits and protections that are provided to employees under the law. If you believe you have been misclassified, it is important to speak with an experienced employment attorney and take steps to protect your rights.