These days, it seems like everybody has a “side hustle,” or some kind of gig work – but a lot of companies may be taking advantage of the average person’s entrepreneurial spirit and “can-do” attitude by misclassifying workers as independent contractors when they’re really employees.
It’s hard to tell how many workers are affected, but numerous studies show that somewhere between 10% and 30% of employers either intentionally or accidentally misclassify their employees. That means millions of workers in this country are being deprived of important benefits that they’re due – not the least of which is the right to workers’ compensation when they’re injured.
The issue may be getting murkier
Back in 2020, the Department of Labor (DOL) established new rules on how a worker’s status could be determined, leaning heavily on two main factors: The worker’s control over their work and the potential for profit or loss. Only if those two factors left the issue unclear would any other factors be considered.
That may soon change. If the DOL’s newest proposal is accepted, the 2020 rules will be rescinded and a multi-factored approach will be used to take in the totality of a worker’s circumstances, including whether or not the work is an integral part of the employer’s business, whether the work requires special skills, and how much economic dependence the worker has on their employer.
In general, however, many workers simply don’t know if they’re really independent contractors or employees – they simply accept what a company tells them on the issue and assume that the company is right. Others don’t realize that they’ve been hired (on paper) as independent contractors because they just assume that they’re employees. They may not find out differently until they get hurt on the job and get told that they’re not entitled to workers’ compensation benefits.
From an employer’s perspective, hiring independent contractors instead of employees makes sense. They can save a lot of money in benefits and workers’ comp premiums by keeping their roster of employees small. Yet, for an injured worker who thinks they should be entitled to benefits, however, misclassification can be a tragedy. If you find yourself in this position, it is wise to seek legal assistance to explore your rights and options under the law.