Texas Worker Misclassification Laws
North 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 or an independent contractor. An employee means you work for a specific company. An independent contractor 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 also 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 Dan A. Atkerson can help you determine if you have been the victim of worker misclassification on the job. Whether you are an 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. This may include handling your employee misclassification lawsuit if an employer refuses to remedy your lost wages and benefits errors.
What is Worker Misclassification? Texas Employee Misclassification Laws Explained
Worker misclassification is when an employer wrongly treats an employee as an independent contractor (IC) and vice versa. This can then 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 his/herown. Texas employers must pay for half of these taxes for each of their employees. However, they do not have to pay it for independent contractors.
- Disqualified for Affordable Healthcare Act coverage as an employee.
- Denied employee rights and protections available to regular employees. This may include things like 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 and an Independent Contractor?
The difference between an employee or indepedent contractor is sometimes hard to determine. However, 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. Please see the chart below.
|Behavioral Control||Given specific instructions and/or training||Given no instruction or training|
|Financial Control||Paid directly, either by the hour or salaried, 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. This 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). This is the central wage and hour law that entitles workers to minimum wage and overtime.
- Texas Workforce Commission’s Unemployment Benefit Services. Employers do not have 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. Additionally, companies do not have to pay for coverage if the worker is 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 also the economy and taxpayers as well.
Call our attorney now for a free consultation at (214) 383-3606.