When we are employees, we expect to be granted the benefits our employer offers. This may be health care benefits, overtime pay if applicable and the possibility of collecting unemployment benefits if we are laid off. However, some unscrupulous employers in the Louisville area will try to classify employees as independent contractors to avoid having to pay these benefits to workers. The following is an overview of employee misclassification and the difference between employees and independent contractors.
What is employee misclassification?
According to the NCSL, an employer commits misclassification when they label workers as independent contractors instead of employees. Doing so is a way for employers to avoid paying worker’s compensation, unemployment insurance, overtime if applicable and other workplace benefits offered to employees.
Difference between employee and independent contractor
The Office of Unemployment Insurance in Kentucky states that an independent contractor is one who performs a job that is not similar or connected to the employer’s business and the employer does not have direction or control over the work an independent contractor performs.
The “Right to Control” test is used to determine whether an employer “controls” the worker for purposes of determining whether the worker is an independent contractor. Under this test, employers do not have to exercise direct control. Control can be shown if the employer could, if they chose to, exercise control over the worker.
The “Nature of Business” test is used to determine whether the work being performed is work that would be performed by an employee. In this test, the court will ask if the work is of the kind that an employee would normally carry out in the usual course of business. The court will also ask if the activities being performed are an integral part of the employer’s regular business.
Take action if your employer is misclassifying employees
Misclassifying employees may save an employer money, but it is a violation of wage and hour laws that must be stopped. If you believe you have been misclassified as an independent contractor rather than an employee, it is important to seek legal advice, which this post does not provide.