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I was hired as a independent contractor which i was not told, but was treated like regular employee. what should i do?

it was my first job and i was never told i was independent contractor and the employer controlled when, where, and how i should work, can i take this matter to court and argue that i was not aware and there was no signs for me to know that i was a idependent contractor. IRS asking for me to pay alot money end of the year, which i wasnt perpared to get such a notice since i was not aware that there no tax being taking out of my pay check. I also did not get any paystabs from the employer beside her payroll deposit to my account. I worked for her in 2009 and 2010 but only for two months and i did not recieve any paper work for 2010 from her and now IRS is asking to Amendem my return for 2010. I would really appreciate legal advice Thank you

Sacramento, CA -

Attorney Answers (3)

Marilynn Mika Spencer

Marilynn Mika Spencer

Employment / Labor Attorney - San Diego, CA
Answered

You have some very serious legal issues involving tax law and employment law, including wage and hour law. Please do not try to handle this on your own. I cannot urge you strongly enough to consult with one or more experienced employment law attorneys with whom you can discuss the details of your situation, and also a tax professional (attorney or CPA) who can coordinate with your employment attorney. Know that your employer may be on the hook in a number of ways, but that ultimately, you are responsible for your taxes.

The main issue in determining who is an employee and who is an independent contractor is who controls your work. The general rule is that a person is an independent contractor if the employer has the right to control or direct the RESULTS of the work but not HOW the work is done or even WHAT work is done.

Many employers misclassify workers as independent contractors and pay them as "1099 employees" when in fact they should be classified and paid as regular W-2 employees. Employers receive a substantial benefit from doing this, but there is NO benefit to the workers. If you are wrongly classified as an independent contractor instead of an employee, you will not be eligible for many benefits of employment or your eligibility will be reduced. Areas affected include the right to:

– be paid for all hours worked or controlled by the employer;
– the legal minimum wage;
– overtime pay;
– rest and meal breaks;
– workers' compensation insurance;
– Social Security contributions;
– unemployment benefits;
– state disability benefits;
– employer benefits such as vacation, sick leave, pension, medical insurance, etc.

Also, in some states, including California, employers are subject to a penalty if they misclassify employees as independent contractors (see below).

There are different ways to determine if a worker is an employee or independent contractor. Employers must comply with all relevant laws.

FEDERAL TAX LAW: The Internal Revenue Service (IRS) looks at three areas to determine a worker’s status:

Behavioral Control: This area considers instructions and training. If the employer has the right to direct or control your work, even if it does not exercise that right, you are an employee. Therefore, if your employer gives you detailed or extensive instructions on how to get the job done, you are probably an employee and not an independent contractor. These instructions might include when to do the work, or how and where to do it; what equipment or tools to use; who you can hire or not hire to help you; what supplies and services to buy, and/or where to buy them. If the employer trains you in required methods of doing the work or the procedures to get the work done, this is evidence the employer wants things done its way, which indicates you are an employee and not an independent contractor.

Financial Control: This area considers who has the right to direct and control the business, not just the work. The more of a financial or promotional investment you have made in the work, the more likely you are an independent contractor. However, there is no requirement for an investment in order to meet the definition of independent contractor. If you incur expenses in performing the work but are not completely reimbursed, you are more likely to be an independent contractor rather than an employee, especially if these expenses are high. If you have the chance to make a profit or loss on the work, you are probably in business for yourself and therefore an independent contractor.

(continued in Comment below)

*** All legal actions have time limits, called statutes of limitation. If you miss the deadline for filing your... more
Neil Pedersen

Neil Pedersen

Employment / Labor Attorney - Irvine, CA
Answered

Yes, you can take the matter to court about your mischaracterization as an independent contractor instead of an employee. While there may be good reasons to do so, it will not relieve you of your obligation to pay taxes to the IRS or any other government authority to which taxes should have been paid by you.

Your conclusion that you were an employee and not an IC seems to be based on the employer control factor. However, there are many factors that need to be assessed in addition to control before a conclusion can be drawn as to whether you were actually an employee or IC. It is a very factually intensive analysis. It would best be performed in person with an attorney as opposed to on this site. I would like to encourage you to locate a local employment law attorney and consult with him or her.

Good luck to you.

This answer should not be construed to create any attorney-client relationship. Such a relationship can be formed... more
Nicholas Basil Spirtos

Nicholas Basil Spirtos

Construction / Development Lawyer - Montclair, CA
Answered

I really can't beat Ms. Spencer's answer, it was excellent and thorough.
But to add one thing, both the federal government and State of California are taking the default approach that every so called independent contractor is an employee and forcing the employer to prove the opposite.
Definitely contact an employment attorney in your area.

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