Some workers in New York get a new job and quickly complete the onboarding process without realizing that there is something different this time. They have accepted jobs before, so they don’t ask questions while filling out employment paperwork. It may only be when issues arise later that they realize things did not go quite the same way they usually do.
For example, the worker might end up hurt on the job and could file a claim for workers’ compensation benefits. Other times, they may work for the company for a year and then encounter unanticipated challenges when they begin their income tax return. It could be a sudden loss of employment due to a termination or layoff that leads someone to realize this employment arrangement is different.
Specifically, they might have taken a job where they work like an employee but the company calls them an independent contractor. In that arrangement, the misclassified employee is exposed to a number of serious personal risks that they may need to address.
All the risks fall on the worker
The misclassification of a worker as an independent contractor can save a company thousands of dollars annually. They don’t need to carry workers’ compensation insurance for that employee. They also won’t have to worry about unemployment contributions or workplace benefits that might be necessary for a direct-hire employee. The company even saves on income tax, as businesses usually have to make contributions on behalf of workers but not on behalf of independent contractors.
A misclassified worker typically needs to make up that difference by paying taxes on their own behalf, and they may not have enough money in savings to cover those expenses. They may also not have protection if they get hurt on the job or suddenly lose their employment. Both New York state authorities and federal agencies can take legal action against employers that misclassified workers.
Workers and companies may disagree about classification
The devil is in the details, as the saying goes. That is certainly the case in scenarios involving conflicts about whether a worker is an independent contractor or an employee. Companies may continue to assert that someone was an independent contractor even when that person has worked like an employee and now needs workers’ compensation benefits.
The tax paperwork that someone has filled out and the agreement they signed with the employer are not the only factors that matter. concerns, including how the company manages their daily work, can also serve as a major influence on how the courts view a case involving alleged misclassification. As such, reviewing someone’s employment arrangements with an attorney could help them determine if they need to take legal action to address a misclassification by their employer.