Many people wonder if it makes a difference to be classified as an employee or independent contractor. It does. An employee has access to benefits and protections that independent contractors lack. Also, independent contractors end up paying more on taxes than employees. If you believe that your employer misclassified you, you can hold them liable and recover any damages by filing a lawsuit against them.
The difference
Independent contractors and employees are not the same. An independent contractor runs their own business, receives payment per project, uses their own material and has the freedom to say when and how to perform the job. On the other hand, employees have less control over what they do and must follow the employer’s directions. However, employees have benefits and protections that independent contractors don’t, such as:
- The right to minimum wage, overtime pay, sick pay or rest breaks
- The right to family or medical leave
- Unemployment benefits if they are laid off or fired
- Some anti-discrimination and anti-retaliation protections
- The availability of worker’s compensation if you they get injured on the job
- Reimbursement for employment-related expenses
- Employer-provided retirement accounts
Also, an independent contractor has to file their own employment taxes. They also pay more on taxes because they have to pay for the Social Security and Medicare taxes themselves. Employees, on the other hand, get help from their employers with half of this expense.
If misclassification occurs
The law in California states that the misclassification of workers is unlawful, so you could file a legal claim against your employer if they classified you as an independent contractor if you are an employee. If you win the case, your employer may have to compensate you for your losses, such as:
- Compensation for unpaid overtime
- Compensation for minimum wage
- Compensation for denied meal or rest breaks
- Compensation and reimbursement for business expenses that you had to pay on your own
- Compensation for lost unemployment insurance payments
You could sue your employer if you suffered any of those losses or if you have proof that they willfully misclassified you. If the court finds them guilty, they will impose expensive fines on them and make them pay you what they owe you. You may also recover your tax expenses if you file a claim with the IRS.
Your right as a worker
Misclassification can hurt workers as well as business owners. If you are a victim of this unlawful practice, you can put a stop to this injustice and recover what is rightfully yours by filing a legal claim against your employer. You deserve your benefits and protections, and you can fight for them in court.