One major area of concern for modern workers is how the so-called “gig economy” impacts their classification as an employee. With more freelancers and contractors entering the marketplace, employees still have several benefits to which freelancers are not entitled. These include the right to file discrimination and wrongful termination lawsuits against their employers. Employees are also entitled to overtime pay and unemployment should they be let go.
This has led several employers to intentionally misclassify employees as contractors in order to skirt worker protections that are available to employees only. This is known alternatively as payroll fraud and is, of course, illegal.
While there is nothing new about the practice, the modern employment environment has allowed employers to exploit a growing gray area. Many employees are themselves confused concerning their status with their company.
What Constitutes an Employee vs. an Independent Contractor
Roughly speaking, independent contractors have more power and control over their day-to-day work than employees do. Employees have managers and bosses. Contractors have customers. While specific technicalities may differ from state to state, Missouri uses the IRS’ 20-factor test as a guide for legally differentiating between employees and contractors.
The key components to this are as follows:
- Employees are expected and required to comply with the “when, where, and how” a job is to be performed. Contractors are not. A contractor can generally dictate how a job will be done, and if the customer does not like it, they can find someone else. Contractors can also set a timetable for the completion of a project. The customer is forced to accept the timetable or find a different contractor.
- An individual who is provided with on-the-job training is considered in most instances to be an employee. Customers do not train contractors on how to complete a task. Bosses do.
- Integration of a worker’s services into the greater whole of a successful business generally indicates that the worker is under the direction and control of the business, and therefore an employee.
- A continuing relationship that evolves over time may be construed as a reason to consider a worker an employee rather than an independent contractor.
- A set or pre-established amount of hours that must be worked can be construed by a court as a reason to classify a worker as an employee rather than a contractor.
- If the worker must devote a substantial amount of his or her time to a given company, especially when the amount of time is above or around 40 hours per week, that individual is likely to be classified as an employee.
- A worker who is required to work on an employer’s premises or uses tools and machinery provided by the employer should be considered an employee and not a contractor.
You will seldom hear of any case in which a contractor has been misclassified as an employee. On the other hand, employees (under the legal definition) are misclassified as contractors all the time. If you believe that you have been misclassified by your employer for the purpose of underpaying you for hours worked, you have a right to sue. Contact HKM Employment Attorneys of Kansas City at 816.607.4691, and we will make sure you get paid properly.