What legal steps should I take if an employer is trying to claim me as a contractor and not an employee?
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What legal steps should I take if an employer is trying to claim me as a contractor and not an employee?
I have worked for a firm that has just 1099 me. According to the IRS website I should fall under an employee of the firm not a contractor. I know that I have to fill out an SS-8 form to dispute this along with a form for social and medicare taxes. The company also billed some of my hours on specific jobs out at $95/hr but I have only received $18/hr. The 1099 is filled out for just what I received, but are there legal steps I can take to obtain the rest of my money? Also would the firm be liable for state and federal tax along with other taxed that were never withheld?
Asked on February 10, 2011 under Employment Labor Law, Massachusetts
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
1) First, the issue of what you were billed vs. what you were paid is not, strictly speaking, a legal issue--companies regularly bill out employees or contractors at a higher rate than they pay the employee or contractor; that's how the business makes money. The company must pay you whatever they agreed to pay you--your agreed upon compensation--but has no obligation to share with you the full amount they billed you out for.
2) However, misclassifying an employee can be a violation of both labor and tax laws. If you were in fact an employee but they classified you as a contractor, they are liable for the FICA and withholding they should have paid. In addition, if you should have been a nonexempt employee (i.e one eligible for overtime), you should have been paid at an overtime rate for any hours over 40 worked in a week.
If you believe that you have not been paid what you should have been paid--i.e. not paid overtime, or not paid for all hours worked; bearing in mind point (1) above, that the company does NOT have to pay you the full amount you were billed out for--and/or that you have had to pay taxes which should have been borne by the employer, you could either sue the money you feel you are owed and/or complain to the labor department or IRS.
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