I worked as an employee for a law firm for 10 years as an employee, then became an independent contractor. I was the billing coordinator. I live in the State of California. All people in the office were told they have 1 week notice and the doors to the law firm close. What are my rights as a self employed who pays their own quartery taxes?
Employment / Labor Attorney
Assuming you were not improperly classified as a contractor, you are still self-employed. You just have one less client and would not be entitled to unemployment benefits. It does not appear you were contracting as a corp that pays unemployment benefits and are losing your job.
I think the key issue for you is how long you worked as a contractor, your duties and what, if anything, changed in your duties between being an employee and a contractor. In other words, despite the label were you a de facto employee and thus entitled to unemployment benefits.
Employment / Labor Attorney
It is suspicious that you would have one customer for your independent contractor business in all those years. 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, when in fact they are 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.
Relationship of the Parties If you do not receive benefits such as medical coverage, vacation, or pension, you may be an employee or an independent contractor. However, if you receive benefits, you are probably an employee.
If you are an employee, your employer must withhold income tax and the employee portion of Social Security and Medicare taxes. Your employer must pay Social Security, Medicare and unemployment (FUTA) taxes on the wages you earn. Your employer must give you an IRS Form W-2, Wage and Tax Statement, every year showing the amount of wages paid and taxes withheld from your pay. As an employee, you have the right to deduct unreimbursed business expenses from your taxes on IRS Schedule A if you itemized deductions and meet the other requirements established by the IRS.
(continued in Comment below)
*** All legal actions have time limits, called statutes of limitation. If you miss the deadline for filing your claim, you will lose the opportunity to pursue your case. Please consult with an experienced employment attorney as soon as possible to better preserve your rights. *** Marilynn Mika Spencer provides information on Avvo as a service to the public, primarily when general information may be of assistance. Avvo is not an appropriate forum for an in-depth response or a detailed analysis. These comments are for information only and should not be considered legal advice. Legal advice must pertain to specific, detailed facts. No attorney-client relationship is created based on this information exchange. *** Marilynn Mika Spencer is licensed to practice law before all state and federal courts in California, and can appear before administrative agencies throughout the country. She is eligible to represent clients in other states on a pro hac vice basis. ***
I agree with my colleagues. Whether you will be entitled to unemployment benefits revolves around the issue of whether you were an employee or an independent contractor.
It is likely you were misclassified as an independent contractor if nothing else really changed from the time you were an employee to when you became an independent contractor.
The only analysis that is helpful is one based on detailed, specific facts, which you won't be able to get here on Avvo.
Frank W. Chen has been licensed to practice law in California since 1988. The information presented here is general in nature and is not intended, nor should be construed, as legal advice for a particular case. This posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, consult with your own attorney.