Misclassification of Employees
Employers are responsible to pay Social Security, Medicare, Workers’ Compensation insurance, and unemployment taxes for their employees, but they are not obligated to offer these benefits to independent contractors. If a worker is injured on the job, they may be surprised to find that their employer classified them as an independent contractor, which means they will not be eligible for Workers’ Compensation benefits.
Employees versus Independent Contractors
It can be difficult to distinguish between company employees and independent contractors, even when both types of employees are working side by side. The main distinctions between employees and independent contractors include:
- Work Schedules: Employees generally have regularly scheduled hours that are dictated by their employer. An independent contractor may be able to work according to their own schedule, so long as their contracted work is completed according to the stipulations of their contract.
- Work Locations: While general employees of a corporation report to a designated office or location, independent contractors often have the freedom to conduct their business at the location of their choice, including working remotely from home. Travel for business purposes is also at the discretion of the independent contractor, whereas company employees are under the supervision of their supervisors or employers.
- Company Benefits: Employees of a corporation often enjoy the benefits of health insurance, life insurance, Workers’ Compensation insurance, profit sharing plans, 401k savings plans, and stock options with retirement benefits. An independent contractor has none of these benefits. They are their own company and as such, they are responsible to carry their own insurance policies and prepare their own retirement investments.
What Happens When an Independent Contractor is Injured on the Job?
The time to confirm the classification of employment is during the interview or at the time of hiring. Many people who believed they were company employees entitled to health and Workers’ Compensation insurance benefits find out that they are classified as independent contractors when a workplace accident occurs. As an independent contractor, the worker is responsible for their medical bills and will not receive compensation for lost wages through Workers’ Compensation insurance.
Workplace injuries can be minor and only require a worker to be out of work for a short time, but other workplace accidents can leave workers with catastrophic injuries. Lost wages due to long recovery periods can lead to a serious financial crisis for the victim and their family. Medical bills and the cost of emergency room visits, hospitalizations, surgeries, rehabilitation services, and prescription medications are costly, even when a victim has their own health insurance.
Workers have the right to question their employers to confirm the status of their employment. If an employee finds that they are misclassified as an independent contractor, it is important to correct the classification as soon as possible. If an employer is purposely misclassifying their employees, they can be held accountable for tax evasion and violations under the federal Fair Labor Standards Act.
What are the Legal Responsibilities of My Employer?
Employers are responsible for classifying their employees according to federal and state laws, which include:
- Satisfying Tax Obligations: Misclassification of employees as independent contractors can lead to tax burdens for employees not familiar with the laws. An independent contractor is responsible for paying their income and self-employment taxes. If they fall short of these payments, they can face serious consequences and fines.
- Compliance with Fair Labor Standards Act Laws: Independent contractors are not protected by the federal Fair Labor Standards Act and are therefore subject to wage and hour violations. If an employer purposely and knowingly classifies their employees as independent contractors to avoid providing Workers’ Compensation benefits, they are violating the Fair Labor Standards Act. Workers who believe they are classified as employees can be left without coverage when a workplace accident occurs.
- Tax Evasion: Employers that knowingly classify workers as independent contractors to avoid paying social security, unemployment, and Medicare taxes can be held liable for tax evasion. This is a serious federal crime that can result in legal consequences and heavy fines.
Wilmington Workers’ Compensation Lawyers at McCann & Wall, LLC Represent Misclassified Employees
If you believe you were misclassified by your employer, contact the Wilmington Workers’ Compensation lawyers at McCann & Wall, LLC. We will review your case and fight for the benefits you deserve. Call us at 302-888-1221 or contact us online to schedule a free consultation today. Located in Wilmington, Delaware, we serve clients throughout the state, including Dover, Newark, and Middletown.