Most workers in New York are classified as employees. Any company that hires them has them fill out a W-2 and needs to abide by both federal and New York state employment laws. However, a small but noteworthy percentage of workers receive job offers as independent contractors rather than employees.
Sometimes, this classification is legitimate. A company wants to hire someone only for a certain project, for example. However, many businesses abuse the option of declaring a worker an independent contractor. They do this to minimize what obligations they have to their employees.
Classification affects wage rights
From minimum wage laws to overtime pay rules, many laws apply to employees but not independent contractors. Companies may offer a set amount of compensation for a project and demand that the worker complete it. The hours they put in might push their hourly wage below the current minimum hourly wage. On the other hand, they may have to put in overtime which the business will not compensate them for because they are not employees. Workers can lose out on wages that they deserve to receive for the work they have performed.
Classification affects workplace protections
Most employers in New York have to participate in the workers’ compensation program or self-insure. They also have to contribute to the unemployment program based on the number of staff members they have. Organizations can bypass those requirements by declaring their employees independent contractors. Those misclassified workers then have minimal protection available if they unexpectedly lose their jobs or get hurt because of their work responsibilities.
Classification affects payroll taxes
When a company hires an employee, they have to make certain tax contributions based on the labor provided. Workers classified as independent contractors will have to pay those taxes themselves. Companies can effectively pass their tax responsibility on to employees by misclassifying them as independent contractors.
Workers who have put in unpaid overtime, who get hurt on the job and/or who struggle with their tax obligations may want to hold their employers accountable for misclassifying them as independent contractors while treating them as employees. Taking legal action against a company can compensate individual workers that the business has misclassified and potentially compel it to change the way it operates.