Sometimes employers take advantage of their workers by misclassifying them as contract workers when they actually are company employees. Additionally, the laws are ambiguous enough that a worker may qualify as an employee under federal laws but still retain his or her status as an independent contractor (IC) under California state laws.
Let's examine some other myths associated with worker misclassification.
- Getting a 1099 tax form automatically means you are an independent contractor. While independent contractors do receive 1099s, you may be classified as such for tax purposes but actually be an employee.
- Independent contractors are ineligible for unemployment insurance (UI). Not necessarily. There can be cases where injured workers do qualify for UI even if certain business entities consider them to be ICs.
- You got paid "under the table," so you aren't an employee. Being on the payroll is not what determines your employment status, That's determined by the scope of your work in relation to the legal definition of employment. You should be aware that you will be responsible for all income tax owed on your wages, however.
- You started as an IC, so your status shall remain that. If your employment relationship with a company changes over time, so may your status.
The biggest mistake that workers can make is to believe that it doesn't matter which way they are classified. It can matter a great deal to both workers and companies. For instance, businesses that follow the letter of the law are at an unfair disadvantage competing against companies that can shred costs by only hiring ICs.
Likewise, workers misclassified as ICs when they are actually employees miss out on all protections and benefits to which they would otherwise be eligible.
If you believe that your employer deliberately misclassified your employment status to deny you protection, wages or benefits, you may need to seek a legal remedy through the California courts.
Source: United States Department of Labor, "Myths About Misclassification," accessed Nov. 03, 2017