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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?

Sacramento, CA |

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

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Attorney answers 3

Best Answer
Posted

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 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. ***

Marilynn Mika Spencer

Marilynn Mika Spencer

Posted

(continued from Answer above) 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. If you are an independent contractor, the employer must give you an IRS Form 1099-MISC Miscellaneous Income, to report what it has paid you. You must pay your own income tax and self-employment tax, and you may be required to make estimated tax payments during the year. You can deduct business expenses on IRS Schedule C of your income tax return. CALIFORNIA LAW: The main test in California is who has the right to direct and control the “manner and means” in which the job is performed. This is similar to the IRS’ Behavioral Control described above. California then looks at secondary factors, which include: Are the services provided on a long-term or repeating basis? Is the worker paid based on the time spent working? Are the services an integral part of the employer’s business? Does the employer establish the work hours? Does the employer determine how many hours will be worked? Does the employer dictate the order in which job tasks are to be performed? Does the worker spend all of his or her time working for one employer? Is the worker supervised? All of these factors tend to show the worker is an EMPLOYEE. Is the worker in a distinct occupation or trade? Are the workers’ services available to the general public? Can the worker hire, supervise and pay assistants? Did the worker make a substantial investment in facilities or services? Does the worker do the job without supervision? Is the worker highly skilled or working in a specialized field? Does the worker supply the tools and other materials used to do the job? Does the worker provide the location in which the work is performed? Is the worker paid at the end of the project? All of these factors tend to show the worker is an INDEPENDENT CONTRACTOR. Also under California law, an employer can be fined for “willfully misclassifying” an employee as an independent contractor. The amount of the fine ranges from $5,000 to $15,000 per violation. If there is a “pattern and practice” of willful misclassification, the fine can increase to $25,000 per violation. To find a plaintiffs employment attorney in California, please go to the web site of the California Employment Lawyers Association (CELA). CELA is the largest and most influential bar association in the state for attorneys who represent working people. The web site is www.cela.org. Click on "Find a CELA Member" and you can search by location and practice area. It is not always necessary to retain an attorney in your local area as many attorneys handle cases throughout the state. I hope you can resolve your situation and wish you the best.

Michael Charles Doland

Michael Charles Doland

Posted

Awesome answer.

Asker

Posted

Thank You Mrs.Spencer that was truly an awesome answer i well take the necessairly step and advice to resolve this issue. Thank You Again

Asker

Posted

Superb answer, but she probably copied and pasted! She's clever.

Marilynn Mika Spencer

Marilynn Mika Spencer

Posted

I use macros, and have said as much on Avvo many times. There is no way I could provide this level of detail if I had to type the same thing out over and over again.

Asker

Posted

I know that Ms. Spencer; I was only kidding. You always contribute impeccable answers! You are thoughtful, candid, and very detailed. That is why you're the top of my list of Best attorneys of 2012! -DK

Michael Charles Doland

Michael Charles Doland

Posted

Only kidding - like your posts about getting away with murder and cannibalism.

Asker

Posted

Great answer!

Asker

Posted

I was wondering what would be the cause of action for such claim?

Marilynn Mika Spencer

Marilynn Mika Spencer

Posted

Generally, you would sue for unpaid wages and for indemnification, and possibly for unfair business practices. But your situation needs an assessment of the specific facts. You need to speak with an attorney, and do so quickly because the dates you worked are already a long time ago and you may lose all or part of your claim.

Asker

Posted

Thank you. I am looking for attorney. problems is I am student and I dont have the money for fees of any attorney.

Posted

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 only through the mutual execution of an attorney-client agreement. The answer given is based on the extremely limited facts provided and the proper course of action might change significantly with the introduction of other facts. All who read this answer should not rely on the answer to govern their conduct. Please seek the advice of competent counsel after disclosing all facts to that attorney. This answer is intended for California residents only. The answering party is only licensed to practice in the State of California.

Asker

Posted

Great answer Neil! I LOVE YOU!

Neil Pedersen

Neil Pedersen

Posted

Thank you. You know my wife is now jealous!

Asker

Posted

Great answer!

Posted

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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