Misclassification may cheat employees out of benefits, rights

When a friend or loved one gets a new job, one commonly asked question is about the employer-provided benefits. Health care coverage, stock incentives, retirement plans and other employee rights, benefits and perks seem to be a mainstay of full-time employment.

Yet in the wake of the 2007 financial crisis, some employers may have shifted their workforce model. According to a study by the Government Accountability Office, an estimated one-third of the current American workforce does not have full-time employment with a single company or employer. 

Under an employment arrangement that is contingent, or not full-time, employers may not be obligated to provide health insurance. Traditionally, such benefits attached only to full-time employees. The ObamaCare employer mandate is a bit broader, using the term full-time equivalent. But even under that approach, seasonal employees, business owners and contractors may be excluded.

An employment lawyer recognizes the significance that can attach to an employment classification. Generally, an employment contract will designate an employee’s status and conditions of employment. In New York State, the most common employment status is at will. Yet even many at-will employees sign employment contracts to memorialize the terms of their employment relationship and any employer-provided benefits.

A recent article confirms the implication of this discussion: There could be a financial incentive for an employer to misclassify regular workers as independent contractors. In doing so, the employer might be trying to avoid obligations owed to full-time employees, such as workers’ compensation and health benefits, full-scale pay, and/or the opportunity to form employee unions or bargaining units. Although this misclassification could expose an employer to legal liability — including potential payroll tax obligations — a 2000 study prepared for the U.S. Department of Labor estimated that up to 30 percent of employers might be guilty of employee misclassification. 

If you or a loved one need help in understanding the terms and conditions of your employment, contact an employment contracts attorney. An attorney may be able to provide assistance.

Source: Billmoyers.com, “Gray Market Work: How Businesses Hurt Workers and Cheat Uncle Sam,” David Bensman, April 9, 2014

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