It is common for individuals to work as freelancers, sometimes doing the same tasks for the same organization for years. Workers may not even be sure if they are correctly classified as an independent contractor compared to an employee of the company. But, there are legal distinctions between the two classifications. For example, benefit eligibility, taxes, and the amount a worker is paid can all be connected to a position being a full-hire employee position or an independent contractor position.
Taxes and Wage Laws
Independent contractors are not paid in the same manner as employees and are therefore taxed differently. Most independent contractors receive a 1099 at the beginning of a calendar year that cites their income for the calendar year prior. Conversely, employees receive W2 tax forms that state their wages earned.
There can also be differences in pay. For employees, they are legally guaranteed to a minimum wage for hours worked. Also, if over 40 hours are worked within one week in a non-exempt position, overtime is earned and should be paid. Because independent contractors are not employees, they do not have the same protections under state laws and federal laws related to minimum wage pay or overtime compensation. To learn more about the distinctions between an employee and a contract worker, talk with a Columbus employment attorney today. Many employers misclassify employees as independent contractors in order to avoid the benefits due to employees, such as overtime. Regardless of how an employer has chosen to classify a worker, that classification could be subject to challenge. If you have concerns about independent contractor / employee misclassification, you should speak with an experienced employment lawyer as you may very well be entitled to overtime pay.
Wages are not the only way employees are paid. Many companies provide benefits to their employees, including non-wage compensation such as the following:
- PTO, including sick days and vacation days
- Health, dental, life, and vision insurance
- Retirement benefits or accounts
- Healthcare reimbursement accounts
- Mileage reimbursement
- Disability insurance, both short term and long term
- Tuition reimbursement programs
- Gym discounts and wellness programs
Determining if an independent contractor is actually an employee can be complex. But the IRS does have guidelines in place to help legal teams and courts determine what the correct classification is for workers. Again, many employers misclassify employees as independent contractors to avoid the additional expenses incurred in correctly classifying the workers, such as an entitlement to overtime compensation.
An Employment Attorney Can Help
In most cases, if a supervisor oversees the hours and projects of a worker, if the company provides equipment, and if the employer is at risk for the profit and loss of a worker that person is likely an employee. The more control a company has over an individual’s work, the more likely the worker is properly classified as an employee, rather than an independent contractor. Of course, every situation needs to be assessed individually. For example, chefs may bring their own knives to work, but even if their employer did not provide this equipment, they are still employees.
It is possible your Ohio employer has misclassified your position as an independent contractor instead of as an employee. If you feel you need to recoup lost wages and unpaid overtime because of a misclassification, it is important you connect with a Columbus employment attorney. Documentation will likely be needed, so it is important you connect with a legal team to understand what you should save in order to strengthen your claim. Legal remedies are available. Do not let an employer take advantage of you and your work.
Have you been misclassified as an independent contractor? Contact the wage and hour lawyers at Coffman Legal LLC to protect your rights. We are strong and committed advocates for all Ohio workers and use our experience and knowledge to help you. Call 614-949-1181 for a free and confidential consultation.