Employment misclassification and unemployment benefits

| Sep 11, 2018 | Unemployment Compensation

A lot of employees end up incorrectly classified as independent contractors when they’re really employees — and that’s a mistake that has the potential to be devastating when you try to seek unemployment benefits. You may suddenly find yourself missing an important safety net that is critical to your financial survival.

How do you know if you were incorrectly classified as an independent contractor instead of an employee? According to the Internal Revenue Service (IRS), there’s not really one thing that makes someone an employee versus an independent contractor. Rather, there’s a combination of factors that have to be assessed as a whole.

Generally speaking, it all comes down to how much independence and control you have over your work. There are three main things that need to be assessed:

1. Your relationship with your employer

Do you have a written contract with your employer? What type of benefits — if any — do you have? The language of your contracts and the extent of any benefits outside of your payment are important clues to your true status. For example, employees are typically reimbursed for their travel expenses, while independent contractors are not.

2. How much financial control the employer has over you

The less financial control you have over your work, the more likely you are an employee. For example, if you’re free to turn down a task, seek other work at will and have multiple employers at any given time, you’re probably an independent contractor. On the other hand, if your employer dictates your right to other employment and determines what work you must be doing at all times, you’re probably an employee.

3. How much your employer controls your behavior

Are you free to set your own hours and work where you want to work? Or does your employer set your hours, enforce a dress code and require you to clock in at an office — even though you could do the job at home? The more your employer sets the rules and restricts your freedom, the more likely you are an employee.

If you think that you’ve incorrectly been denied unemployment benefits based on a misclassification as an independent contractor, you can — and should — fight the denial. An attorney can help you assess your situation and explain more about the process.