Independent contractors are those who provide goods or services to other people or businesses. Independent contractors are self-employed and usually treat the individual or company that retains them as customers or clients (they can have multiple of them). True independent contractors are not subject to the company’s control or guidance.
Why Do Companies Misclassify Employees As Independent Contractors?
Simply speaking, classifying an employee as an independent contractor reduces labor costs. Some of the incentives that drive employers to misclassify their employees are:
- Employers are not required to pay Social Security and unemployment insurance for independent contractors.
- Employers don’t have to take care of their legal responsibilities to workers, like providing minimum wages or following wage and hour laws, since these are practices that are required by law only with employees.
- Misclassified workers are generally not protected under the Equal Employment Opportunity Commission (EEOC). This leaves them vulnerable when it comes to civil rights (such as prohibitions of employment discrimination based on protected categories: race, gender, disability, race).
- Employers can thwart union organizing and bargaining units because the National Labor Relations Act does not cover independent contractors.
- Independent contractors don’t have access to employer-based health insurance or pension plans, saving the company money.
- Employers don’t need to provide independent contractors with a work visa or U.S. citizenship. If they hire illegal immigrants, these workers are exposed to being exploited with no legal support.
If you have been classified as an independent contractor, but you are actually an employee, you should consult an employment lawyer for a better understanding of your rights. At Proxy Law Firm, we will help you fight for your rights and get you the compensation you deserve.