Am I an independent contractor or employee?
Whether you’re an employee or an independent contractor depends on the conditions of your employment, not your job title or work schedule. The law says you’re an employee unless your employer can show otherwise. Your employer might have misclassified you as an independent contractor when you’re actually an employee. Workers who are often misclassified include “temporary” workers, contract laborers, construction workers, maids, domestics, nannies, gardeners, and other workers who don’t have enough control over their work to be “independent contractors.” The ability to set your own work schedule does not make you an independent contractor. Your job title does not make you an independent contractor. It’s about the work that you do.
Why does my employment classification matter?
Federal and state labor laws apply only to employees, not to independent contractors. If misclassified as an independent contractor, you could be missing out on overtime wages or other employee benefits, or pay more in taxes. Employers are legally required to:
1) pay employees minimum wage and overtime;
2) pay employees at least twice a month;
3) provide an earnings statement for each pay period showing hours worked, gross and net pay;
4) provide a W-2 wage and earnings statement at tax time;
5) pay employment taxes, and other legal requirements.
Employers often misclassify workers to get around these laws.
What if I’m not sure?
There isn’t one single test; it’s a combination of factors.
- How long are you supposed to work for your employer? If it looks more like a permanent job without an end date, you are probably an employee.
- How much control does your employer have over the work that you do? If you have actual control over the meaningful aspects of your employment - what you do and how you do it - you are probably a contractor. Setting your own work schedule is not enough to make you an independent contractor.
- Can you make a profit or loss through your work? If your own decisions can create a profit or loss for the business, you’re probably an independent contractor. Deciding to work more hours for more pay doesn’t count towards profit and loss. It has to be profit or loss to the company, not you.
- Is your work an “integral part” of the business? For example, if you work as a carpenter for a construction company that frames residential homes, you are integral to the employer’s business – they couldn’t do it without you. If the business is custom decorated cakes, your work as a cake decorator is integral to your employer’s business. If you are an “integral part," you’re probably an employee.
- Does your work require “special skill and initiative?" Special skills mean skill in making business decisions, not technical skills. If your work doesn’t require you to make business decisions, you’re probably an employee.
You could be an employee even if:
1) You signed a contract stating that you agreed to work as an independent contractor;
2) Your employer provided a 1099-MISC instead of a W-2 Form (wage statement) to file with the IRS;
3) You were paid in cash or per job; or
4) You have a flexible work schedule.
How can I protect myself?
If you want to recover unpaid wages or have some other legal problem, it’s important to get information on the person and company that hired you:
- Contact information: Get the name, address, and telephone number of the person who hired you. Write down the make, model, and license plate number of their vehicle.
- Work: Write down the location, dates and hours you worked, the kind of work that you did, what you were paid, and what you are owed.
- Written agreement: Try to get a written agreement that describes the work, how much you’ll be paid, and when. If the agreement isn’t in writing it can still be enforced, but it’s more difficult to prove. Your testimony, receipts for work purchases, your notes about the job, and your time log can be used prove an oral employment agreement.
- Demand letter: Write a “demand letter” to your employer demanding to be paid what you’re owed. Send one copy by certified mail, return receipt requested, and the other copy by first class mail to your employer. If your claim is under $10,000*, you can sue in justice court (small claims court) without the need for a lawyer. Justice court is for people who don’t have a lawyer or can’t afford one.
*Note that effective September 1, 2020, the maximum amount of money that you can get in damages in small claims court has increased to $20,000 from $10,000. Learn more from this Texas Justice Court Training Center video, and read Texas Rules of part 5.
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