Workers in the
War on Wage Theft
Employers often cheat their workers, the government and their competitors by misclassifying their employees as independent contractors. The U.S. Department of Labor has identified the misclassification of employees as independent contractors as a major factor in the American wage theft crisis. Employees who are misclassified as independent contractors are denied their rights under minimum wage, overtime and other worker protection laws.
Workers are not independent contractors just because they receive a 1099. Independent contractor misclassification is sometimes referred as 1099 fraud because employers will send their misclassified workers an IRS Form 1099-Misc at the end of their year, rather than a W-2 Form. The employer’s designation of the worker as an independent contractor does not determine whether a worker is legally classified as an independent contractor. Under federal law, courts look at the overall substance of the relationship between the employer and the worker. Courts take into consideration all evidence of control of the employer and independence of the worker.
“Some people call the practice ‘misclassification.’ I call it what it is: workplace fraud. Workplace fraud has three victims: the worker of course; the employers who do the right thing but find themselves undermined by an un-level playing field; and the government, which gets cheated out of unpaid taxes.”Thomas Perez, United States Secretary of Labor
Workers are not independent contractors just because they signed an independent contractor agreement. Employers commonly require their workers to sign an independent contractor agreement stating that the worker understands that she is an independent contractor. However, if the employer treats the worker like an employee, no contract will allow him to break the law.
Workers are not independent contractors just because they were required to set up an independent business in order to do the work. Employers offer try to skirt the law by having their workers set up independent businesses. However, this tactic does not necessarily turn an employee into an independent contractor where the employers controls the way that the work is performed.
Independent contractor abuse is most prevalent among the following groups of employees:
Federal law regarding independent contractors provides the minimum requirements that employers must satisfy. Some state laws define independent contractors more narrowly, provide for longer statutes of limitations, and impose harsher penalties for violations. An employer must satisfy the exemption requirements for both federal law and the state where his workers are employed.
If you think your employer has improperly classified you as an independent contractor, contact the Marlborough Law Firm today for a free consultation.