Employees Misclassified as Independent Contractors

Misclassified Employees Lose Significant Employment Benefits

photoMany employers try to save money by improperly labeling some of the employees they hire as independent contractors. Being improperly designated an independent contractor can have serious negative consequences for you. Typically, independent contractors are not eligible to receive employee benefits such as health insurance, paid vacation, holiday or sick leave, 401(k) plans, pension plans, state disability insurance, unemployment insurance and many other employee benefits. Additionally, independent contractors often have little or no protection from workplace discrimination, harassment, or retaliation they are subjected to at the employers for which they work. As a result, it can be extremely important to know whether you really are an employee even though your employer is calling you an independent contractor or consultant.

Misclassification of employees has become such a serious concern that the United States government is vigorously enforcing laws addressing the issue. But the federal government cannot prevent all employee misclassifications.

Am I an Employee or an Independent Contractor?

It often can be confusing to determine whether you are an employee or an independent contractor, especially since companies misclassify their workers so frequently. Even if you signed a contract stating that you are a consultant, you still might be an employee.

The three most important factors to determine whether you are an employee rather than an independent contractor under New Jersey’s anti-discrimination law, the New Jersey Law Against Discrimination (LAD), and its whistleblower law, the Conscientious Employee Protection Act (CEPA), are:

  • How much control the company has over your work;
  • How economically dependent you are on your job; and
  • The extent to which your job is integrated into the company's business.

Other relevant factors include your level of skill; whether you or the company provide your tools, equipment and workplace; how long you have worked for the company; and whether the company pays you like an employee or like an independent contractor.

For more information about legal protection for independent contractors under New Jersey law, please read our blog article: Independent Contractors Protected by Conscientious Employee Protection Act. We also welcome you to subscribe to our free electronic Employment Law Newsletter.

Contact an Employment Law Attorney

The attorneys at Rabner Allcorn Baumgart & Ben-Asher are dedicated to advancing employee rights in New Jersey and New York.

To help determine if your company has misclassified you as an independent contractor even though you really are an employee, or to learn more about any of your other legal rights in the workplace, you can contact us online or call us in New Jersey at (973) 744-4000. We have the experience, knowledge and dedication to enforce your legal rights at work.