Misclassification as an independent contractor is a widespread issue that affects workers across Texas. If you’ve been classified as an independent contractor when you should legally be considered an employee, you may be missing out on consequential benefits and protections, including minimum wage, overtime pay, health insurance and workers’ compensation.
The key distinction between an independent contractor and an employee lies in the level of control the employer has over an individual’s work. Generally:
- Employees: Are subject to their employer’s direction regarding how, when and where their work is performed. Employers also withhold payroll taxes and provide benefits like health insurance, paid leave and unemployment insurance.
- Independent Contractors: Operate as self-employed individuals. They have more control over how they complete their work, provide their tools and materials and are responsible for their own taxes.
Unfortunately, some employers intentionally misclassify workers as independent contractors to avoid paying taxes, benefits, and overtime wages.
Signs you may be misclassified
You might be misclassified as an independent contractor if:
- Your Employer Controls Your Work: If you’re required to follow strict schedules, use specific methods or perform tasks under close supervision, you may be an employee.
- You Use Employer-Provided Tools: Independent contractors typically use their own tools, equipment or resources.
- You Have Long-Term Work Commitments: Employees often have ongoing, indefinite relationships with their employers, while independent contractors are hired for specific projects.
- You’re Paid Hourly or Have Deductions: Independent contractors are typically paid per project or deliverable, not by the hour and they don’t have payroll deductions for taxes.
- You Perform Work Central to the Business: If your tasks are integral to the company’s primary business, you may be classified incorrectly.
If you believe you’ve been misclassified, seeking personalized legal guidance can help you to better understand your rights and options under the law.