Independent Contractor Issues

As businesses of all sizes throughout the United States look for ways to cut costs while still meeting their productivity requirements, one resulting trend that often escapes discussion is the fraudulent shift away from employees and toward independent contractors. Businesses have found that heavily utilizing so-called independent contractors allows them to avoid many of the costs associated with having W-2 employees. Many businesses have taken to misclassifying, cheating and otherwise abusing hardworking contractors for their own financial gain. Furthermore, workers falsely deemed independent contractors are all too willing to assume that they have only limited rights because they believe falsely that they are not employees. If you have been wrongfully paid on a 1099 and classified as an independent contractor, you may be entitled to significant compensation. At Joseph & Kirschenbaum LLP, our NYC employment attorneys can analyze the facts of your case to determine your options.

Many businesses have come to prefer independent contractors over traditional employees for numerous reasons:

• True independent contractors are not covered under minimum wage and overtime laws. Contractors are often paid either a flat fee for a particular project or a piece rate for output. This may result in some contractors actually receiving less than minimum wage for hours worked and not receiving time-and-one-half for overtime. This is legal for true independent contractors and a serious violation by employers for the many workers wrongfully deemed independent contractors.

• True independent contractors are not covered under employment discrimination laws such as the Civil Rights Act and the Americans with Disabilities Act. Businesses cannot be sued under these acts for refusing to hire a contractor based on race, refusing to provide reasonable accommodations or allowing a hostile work environment to exist. However, even for true independent contractors, race discrimination is illegal under other laws, as are certain other kinds of discrimination and retaliation.

• True Independent contractors are not entitled to workers compensation, health and pension benefits, and because they are paid on a 1099, none of their Social Security and Medicare benefits are paid by the employer.

• Wages due to employees are given preferential treatment in bankruptcy and estate proceedings while independent contractors are simply treated as creditors.

Most employee rights laws were created with the understanding that employers typically have greater bargaining power than the people they employ, and laws are necessary to even the playing field. Correctly or not, the law regards true independent contractors as being on even footing with the people who hire them, thus denying them many of the benefits W-2 employees receive.

Just because a business calls a worker an independent contractor does not make it true. Whether a worker is classified as an independent contractor is a legal determination that involves several factors. The precise rules for distinguishing between an employee and an independent contractor depend on context and the law in question. In New York State, however, courts typically look at the following factors to determine the economic reality of the relationship:

• The degree of control exercised over the worker by the employer
• The worker's opportunity for profit or loss from the activity
• The degree of skill and independent initiative required for the activity
• The permanence and duration of the working relationship
• The extent to which the work is an integral part of the “employer's” business

Especially now, many workers who are considered independent contractors are so only in name and not under the law. These workers may be entitled to the protections typically afforded to employees even if they are labeled as independent contractors, including the protections of the minimum wage and overtime premium pay laws. A group of workers all deemed independent contractors are usually not.

As a comprehensive employment law firm in New York City, the attorneys and staff at Joseph & Kirschenbaum LLP understand the complexities of the employer-employee relationship. If you are working or worked for a business that you believe misclassified you as an independent contractor, you may have legal options. Our attorneys can analyze the details of your business relationship to determine if you are entitled to the rights of an employee and then examine your employer's conduct to see if it violated those rights. Contact us today at 212-688-5640, or online to arrange a no-cost intake assessment. Se habla espanol.