Texas Worker Misclassification Laws
Dallas Employment Attorney for Misclassified Employee or Independent Contractor Lawsuits
In the eyes of the Internal Revenue Service (IRS), workers in America can be one of only two things: an employee, meaning you work for a specific company, or an independent contractor, which means you have gone into business for yourself. Sometimes, the lines dividing employees and independent contractors can seem a little blurry.
Worker misclassification not only results in a loss of wages for the misclassified employee, but it results in significant losses for the government as well. Worker misclassification as independent contractors instead of classification as a regular employee can also result in missed overtime pay, lost benefits and other costs.
Employment misclassification attorney in Dallas Dan A. Atkerson can help you determine if you have been the victim of worker misclassification on the job. Whether you are an Dallas TX contractor treated as a regular employee or a regular employee misclassified as an independent contractor, he can help you choose the best option going forward and handle your employee misclassification lawsuit if an employer refuses to remedy your lost wages and benefits errors.
What is Worker Misclassification? Texas Employee Misclassification Laws
Worker misclassification is when an employee is wrongly treated as an independent contractor (IC) and vice versa, which can result in a variety of wage issues. For example, a worker who has been misclassified as an IC may be:
- Required to pay all Social Security and Medicare taxes on their own – Texas employers are obligated to pay for half of these taxes for each of their employees, but not for workers classified as independent contractors
- Disqualified for Affordable Healthcare Act coverage as an employee
- Denied employee rights and protections available to regular employees, such as minimum wage, rest breaks and overtime
- Ineligible for Texas workers’ compensation and unemployment benefits – Employers may be required to pay for unemployment and workers’ comp insurance for employees, but not for workers classified as independent contractors
What is the Difference Between an Employee or Independent Contractor?
The difference between an employee or indepedent contractor is sometimes hard to determine, but it really boils down to the worker’s level of independence. In order to figure out how to label a worker, you have to look at how much control an employer has:
|Behavioral Control||Given specific instructions and/or training||Given no instruction or training|
|Financial Control||Paid directly, either by the hour or salary, and reimbursed for expenses related to travel, equipment or other similar costs||Pay for their own expenses, such as travel, tools, facilities and are generally paid an agreed upon amount per project|
|Employer Relationship||Receive employee benefits and are able to quit or be fired at will||Are not eligible for employee benefits or employer healthcare coverage – ICs typically have a client agreement with the hiring party and cannot quit or be fired at will|
Am I a Misclassified Employee? Texas Worker Misclassification Statistics
The latest employment statistics from the U.S. Department of Labor estimated that as many as 30 percent of the American workforce may be victims of worker misclassification, which costs workers and the government billions of dollars every year. For example, a study by the McClatchy Washington Bureau found as many as 37 percent of workers in Texas may be misclassified as independent contractors.
Government agencies that oversee worker classifications also determine what types of employees get what workplace rights, including the:
- IRS – Companies do not have to withhold federal payroll taxes, such as Social Security, federal disability and income taxes, for workers classified as independent contractors.
- U.S. Department of Labor – Independent contractors are not covered under the Fair Labor Standards Act (FLSA), which is the central wage and hour law that entitles workers to minimum wage and overtime.
- Texas Workforce Commission’s Unemployment Benefit Services – Employers are not required to pay unemployment insurance for workers classified as independent contractors.
- Texas Workers’ Comp Insurance Companies – Independent contractors are not entitled to receive workers’ compensation benefits and companies are not required to pay for coverage if the worker is classified as an independent contractor.
Unfortunately, many workers remain misclassified, costing the government and these employees a lot of money. If you are an employer in need of guidance in properly classifying your employee, or if you are a worker unsure of whether your job has properly classified you, it is important you take immediate action to remedy the situation. Employment misclassification not only hurts workers, but the economy and taxpayers as well.