What Is Worker Misclassification?
Worker misclassification is when your employer classifies you in the incorrect worker category. In almost all cases, misclassification is when an employer classifies workers as independent contractors, when in fact, they are employees. This is sometimes called false self-employment.
Just because a company issues you a 1099 tax form, that does not mean you are legally an independent contractor.
Signs you are an employee and not an independent contractor include:
- Your job is similar to other full-time coworkers who are classified as employees;
- You have been hired indefinitely, rather than for a specific period of time;
- All or most of the equipment you use is issued by your employer; and
- You do not issue invoices to your employer.
Why Misclassification Is Bad
If your employer misclassifies you as an independent contractor, you will:
- Pay all your Social Security and Medicare taxes out of your own paycheck.
- Be ineligible for workers’ compensation benefits.
- Have none of the workplace rights that employees have.
- Be ineligible for unemployment benefits.
Not only does misclassification hurt workers and law-abiding businesses, but it also hurts the State. The State loses millions of dollars of revenue each year due to misclassification. This deprives critically important agencies and programs of necessary funding.
Are There Penalties for Misclassification?
Yes. The Commissioner of New Jersey’s Labor and Workforce Development may fine employers $250 for a first-time misclassification violation. Subsequent violations are subject to $1,000 fines.
If you were misclassified, you can receive back pay for unpaid minimum wage, overtime, failure to pay prevailing wage, and various other fines as addressed in the NJ Wage and Hour Laws. You will also be entitled to the benefits afforded to employees such as workers’ compensation and unemployment insurance. Additionally, your employer may be required to pay you a penalty equivalent to up to 5% of your gross earnings from the past 12 months. Finally, if you were wrongfully terminated due to complaining about misclassification, you could be reinstated.
Stop Work Orders
The Commissioner may issue stop work orders to employers that violate state wage, benefit, or tax laws. Stop work orders suspend the employer’s operations wherever the violations occurred. Employers that do not obey stop work orders may face fines of $5,000 per day.
Consult with Our Moorestown Misclassification Attorneys
Unfortunately, misclassified workers tend to be “the little guys.” This includes construction workers, caretakers, and many other low-wage workers. Far too many of these misclassified workers fear retaliation for complaining about their worker classification status. This is not conducive to a level playing field in America’s workforce. Employment attorneys Richard Schall and Patricia Barasch fight against any corporation, no matter how big, or advocate for any worker, no matter how small.