Misclassification of Independant Contractors

When deciding whether a worker has been misclassified, the Internal Revenue Service examines various factors regarding the relationship between the employer and the worker. If the Internal Revenue Service concludes that the worker has been misclassified as an independent contractor, the employer faces severe penalization for harming the worker, avoiding tax, and shirking important insurance payments. Various factors used by the Internal Revenue Service to decide 1099 contractor misclassification include the following:

Financial influence: Independent contractors are rarely paid a regular, weekly wage. Similarly, they have usually made a financial investment in their own business, through which they offer services to employers. If these factors are absent, a worker is most likely an employee, not an 1099 contractor.

Behavioral influence: Factors such as workplace, work time, work attire, training for work to be completed, and where the worker obtains tools required to complete a job influences whether or not a worker is an independent contractor. If the employer controls these factors, the worker is most likely an employee, and not a 1099 contractor.

Duration of work: Independent contractors usually take on specific, finite projects. Meanwhile, employees aren’t often hired with a clearly defined end date. Instead, they receive new assignments as work is completed. Consult your San Diego employment lawyer to decide how duration of work affects your situation or the status of your workers, as some private contractors may receive ongoing assignments.

Nature of work: Employees usually complete work that is essential to the functioning of the business, rather than  providing supplemental labor, which is more often the role of an independent contractor. For example, delivery drivers for a microbrewery generally would not be considered 1099 contractors, since, although they are not working in a traditional, controlled office setting, their work is   essential to the functioning of the company. Meanwhile, a freelance writer who creates advertising content for a business would be more likely considered a 1099 contractor, since the services he or she provides are supplementary, and not essential to day-to-day functioning.

Relationship between employer and worker: If a worker is free to pursue other jobs in addition to working for the employer in question, then he or she may be an independent contractor. However, if the employer provides the sole source of income for the worker, than he or she may be considered an employee.

Deciding whether a worker is an independent contractor can be confusing. Employers who are unsure of how to classify workers are strongly advised to consult a San Diego employment lawyer, since even accidentally misclassifying an employee as a 1099 contractor can result in severe punishment. Similarly, if you are a worker and feel you may have been misclassified, save yourself time and money before filing a suit by consulting a San Diego labor lawyer to determine your legal status