There are several ways that employers may try to control costs at the expense of their workers. In some cases, they engage in misconduct related to how they calculate wages. Other times, they may attempt to manipulate workers into scenarios that benefit the company and violate the rights of the workers.
One such tactic involves wrongfully classifying employees as independent contractors. Employers may treat individual workers like employees but may have them sign contracts and fill out tax paperwork as though they are actually independent contractors. Such scenarios can benefit a company while imposing several types of hardship on the workers that the organization misclassifies.
Cutting them off from crucial benefits
Employers have to provide certain types of benefits for direct-hire employees. They typically need to carry workers’ compensation coverage in case the employee gets hurt on the job. They also have to make contributions to unemployment. Companies can reduce the costs generated by hiring workers when they misclassify them, but those employees then do not have any protection if they get hurt or lose their jobs.
Making them responsible for more taxes
Employers typically make certain payroll tax contributions based on the wages they provide workers. Those contributions help reduce how much of an employee’s paycheck goes to the federal government every week. Employees classified as independent contractors have to cover all payroll taxes on their own behalf. They also have to make quarterly estimated income tax payments and can face financial penalties if they fail to do so.
Cutting them off from wage protections
Employees have protection from abusive employment practices. The law entitles them to at least minimum wage. If they are hourly workers or non-exempt salaried employees, they should also receive overtime wages. In scenarios where companies misclassify workers, they can demand that they work overtime without extra pay. The total number of hours worked may actually result in the employee receiving less than minimum wage.
Holding employers accountable for misclassifying employees can help compensate them and generate consequences for those in the wrong. Employees should not have to put themselves at risk and accept unfair treatment because companies don’t want to follow employment laws.