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Employment Violation - can I sue?

Wilsonville, OR |

In 2006 I was fired from my position of Director of Bus. Dev. and rehired 1 min later as a contractor to do the same work. I never signed a contract agreement and my company (still with them now) continued to keep me doing the same thing, they did not pay taxes anymore or health ins. or vacation but they did keep my stock option vesting. 7 months later they asked me to be an employee again. When I was made a contractor they lowered my pay by 12k a year on the base. I was devistated by this transaction and it has hurt my earning potential and career. I have been afraid to so anything because I still work for the company. Do I have any line of action that I can take?

Attorney Answers 1


The tests for when someone should be considered an employee or an independent contractor differ depending on the law being applied, but generally one thing they have in common is who controls the work. Typically a contractor will bring his or her own tools and equipment, apply independent judgment, etc. Even when someone is a contractor (e.g., hired by a temp agency and assigned to a particular business), they still can be considered an “employee” of the business under some laws — such as discrimination laws. If you showed up for work and nothing was different, it may be that you were misclassified. This is not uncommon and obviously has some problems. When employees are misclassified as independent contractors, they may be excluded from coverage under key laws designed to protect workers and may not have access to employer-provided health insurance coverage and pension plans. Moreover, misclassification of employees can affect the administration of many federal and state programs, such as payment of taxes and payments into state workers' compensation and unemployment insurance programs. If a company misclassifies an employee, the business is at risk for the payment of unpaid taxes, overtime, benefits, and penalties.

There have been plenty of lawsuits about misclassification. FedEx workers are involved in a class action concerning misclassification. In addition, not too long ago, Microsoft settled a case for $92 million in a case where workers were improperly excluded from benefit plans because they were misclassified. After that case, many employers amended their benefit plans to clarify that employees are excluded if they are considered contractors, but that is something you should investigate. It may be that you are entitled to benefits under the employer’s benefit plans–and you can sue for that–depending on how the plans define who is eligible to participate. You should request copies of your benefit plans. The “plan administrator” (probably the employer) is required to comply with such a request.

There is much more to say on this subject, and some of the advice will vary depending on your individual circumstances. Therefore, I would suggest that you talk with an employment attorney about your options. I am licensed in Oregon and can try to answer your questions if you like.

This may be more information than you wanted but the Government Accountability Office did a report on employee misclassification not too long ago. That is linked below along with information from the IRS on correcting misclassification.

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