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3 ways worker misclassification can impact employees

On Behalf of | Mar 19, 2024 | Employment Law For Workers |

Sometimes, workers are so eager for new opportunities that they accept terms that may prove unfavorable to them in the long run. For example, a worker might sign documents and fill out tax paperwork that identifies them as an independent contractor. However, they agree to effectively work the same way that an employee does. The company micromanages their daily work activities and depends on them for regular services that are critical to the business’s primary functions.

Misclassification may seem like a minor issue until workers come face-to-face with the consequences of their status as contractors rather than employees. The following are usually the most significant concerns for workers misclassified as independent contractors by their employers.

An increased tax burden

Self-employed professionals have more tax responsibilities than employees do. They have to file quarterly estimated tax payments instead of just one annual tax return. They also pay more money in employment taxes than those classified as standard employees. Employers typically make payroll tax contributions after hiring workers. Self-employed individuals have to pay those taxes on their own behalf.

A lack of workplace protections

Fair pay laws, overtime rules and other crucial statutes implemented for the protection and well-being of employees do not apply to independent contractors. Misclassified workers may not receive minimum wage when they look at how many hours per week they work. They may lose out on overtime pay. They could also be more vulnerable to retaliatory actions if they complain about work conditions or harassment on the job.

Difficulty accessing insurance

There are two kinds of insurance that most employers in California maintain on behalf of their workers. Companies have to carry workers’ compensation coverage in case workers develop medical issues related to their jobs. Employers typically also need to contribute to the unemployment insurance program. Companies can sidestep those obligations when they misclassify workers.

Those treated like employees may not be able to access the basic protections typically afforded to workers such as medical coverage for on-the-job injuries and wage replacement after a sudden termination. Companies largely benefit from worker misclassification, while employees must accept a lot of additional risks and costs. Fighting back against employer misclassification can help workers access any benefits or pay that they deserve but have been denied as a result of this kind of intentional or unintentional misconduct.