Employee vs independent contractor lawsuit

Can I file a lawsuit against an independent contractor? What is independent contractor misclassification lawsuit? Should employees be classified as independent contractors? The employer may also. Workers who have been victimized by an independent contractor misclassification can pursue legal action against an employer.

An independent contractor misclassification lawsuit can earn an employee money damages from the employer.

Employees have many legal rights that independent contractors do not. Those can include the right to overtime pay,the right to meal breaks,and the right to a minimum wage. Workers who are treated as contractors— but should be classified as employees —may be able to file a lawsuit against the company they work for and recover back pay and other benefits.

If you have additional questions about the law in your area, speak with an employment attorney today. Classifying a worker as an employee or an independent contractor has a significant effect on the cost of employing that individual. Misclassification of Employees as Independent Contractors Misclassified employees often are denied access to critical benefits and protections they are entitled to by law , such as the minimum wage, overtime compensation, family and medical leave, unemployment insurance, and safe workplaces. For the employee , the company withholds income tax, Social Security, and Medicare from wages paid.

For the independent contractor , the company does not withhold taxes. See full list on acf.

Facts that provide evidence of the degree of control and independence fall into three categories: 1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job? Financial: Are the business aspects of the worker’s job controlled by the payer? Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)?

Will the relationship continue and is the work performed a key aspect of the business? Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent cont. Be aware that it can take at least six months to get a determination, but a business that continually hires the same types of workers to perform particular services may want to consider filing the Form SS-8(PDF).

Once a determination is made (whether by the business or by the IRS), the next step is filing the appropriate forms and paying the associated taxes. Forms and associated taxes for independent contractors 2. There are specific employment tax guidelines that must be followed for certain industries. If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes for that worker (the relief provisions, discussed below, will not apply).

Employment Tax Guidelines: Classifying Certain Van Operators in the Moving Industry(PDF) 2. If you have a reasonable basis for not treating a worker as an employee , you may be relieved from having to pay employment taxes for that worker. To get this relief, you must file all required federal information returns on a basis consistent with your treatment of the worker. Note that this civil lawsuit by the plaintiff-employee against the defendant-business owner is in addition to any sanction or penalty the Virginia state government or the U. Mislabeling a worker as an independent contractor creates potential liability for employment taxes and penalties, and liability for failure to fulfill the many legal obligations owed to an employee , such as wage and hour requirements.

Gibson shares articles about properly classifying workers as employees or independent contractors From JDSupra, Richard Reibstein discusses a new type of lawsuit in which a company sues another for unfair competition alleging that the misclassification of independent contractors is an unfair business practice. Courts look at a number of factors to determine whether a worker should be classified as an independent contractor or an employee , including who supplies tools and equipment, the type of work being performe and how much control the hiring company has over the job. FedEx Independent Contractor Lawsuit.

Department of Labor (DOL), IRS, and state agencies can total millions of dollars. Supreme Court’s lead in Nationwide Mutual v. With the ascent of the gig economy, there’s widespread belief that using independent contractors can simplify your business and save money. While some companies may reap those benefits, others may be seriously harmed by using contractors instead of employees , whether through diminished ability to control its contractor workforce or being penalized for misclassifying employees as contractors. A worker may be denied the status of employee “only if the worker is the type of traditional independent contractor — such as an independent plumber or electrician — who would not reasonably have. Willful misclassification of an individual as an independent contractor carries a civil penalty of between $0and $20per violation.

An employer must withhold income taxes and pay Social Security, Medicare taxes and unemployment tax on wages paid to an employee.