Employers must classify the people who work for them as employees or independent contractors. The classification of employment impacts your wages, taxes, rights, benefits, and responsibilities as an employee. Misclassification as an independent contractor could be harmful in several ways. Do you believe your employer has misclassified you as an independent contractor? A Phoenix employment lawyer can help you take steps to remedy the situation.
Employee vs. Independent Contractor in Arizona
Most workers are classified as employees. An employee is someone who works for another party. The employer has extensive control and supervision of employees as they perform their work. The employee performs services for the employer in exchange for the payment of wages.
Employees may have a written employment contract, but it is not required. Arizona is an at-will employment state, so either party can terminate employment at their discretion. In either case, the employer has the right to dictate the employee’s work duties, including telling the employee how and when to perform those work duties.
An independent contractor also performs services for another party. They may perform the same services as an employee. However, an independent contractor is not an employee. They are free to work for multiple clients simultaneously.
The employer does not exercise the same control over how and when an independent contractor completes the work. Instead, the parties agree on the final outcome, and it is up to the independent contractor to ensure the job is completed on time and in compliance with the terms of the service agreement.
Am I an Independent Contractor or an Employee?
The Internal Revenue Service (IRS) provides guidance on correctly classifying workers. There are three main categories to consider when determining whether a worker is an independent contractor or an employee:
Behavioral Control
Does the employer have the right to control or direct how you perform your work? Employers can tell employees how to perform services, including:
- When, how, and where to do the work
- Where to purchase services and supplies
- Who can help perform the work
- What equipment or tools should be used to perform the work
Employees often receive training about the methods and procedures for performing work. Employers dictate the specific way to perform the work. You are likely an employee if the person who pays you dictates the hours, location, and how you perform your job.
Financial Control
Independent contractors have a significant investment in their work. They are not reimbursed for their expenses and provide the tools and equipment for performing the work. They also may profit from their work or experience a loss.
An independent contractor is not paid a specific wage or salary. Instead, they are paid a set price based on a specific project.
Relationship Between the Parties
You must consider the relationship between the parties when classifying a worker. Employees typically expect to receive employment benefits. The employer withholds taxes and pays benefits for the worker. The worker expects to receive paid sick leave and other benefits.
Independent contractors are responsible for paying self-employment taxes. The employer is not required to pay employment taxes for independent contractors. Likewise, independent contractors are not entitled to employment benefits, including retirement, health insurance, and paid leave.
In many cases, an independent contractor has a written agreement with the employer defining the relationship. The contract specifies the work to be performed or the project to be completed, and the payment to the independent contractor.
Why Do Employers Misclassify Employees as Independent Contractors?
One of the most common reasons for misclassifying employees as independent contractors is to save money. An employer does not pay employment taxes or benefits for an independent contractor.
Independent contractors are not entitled to paid leave, unemployment insurance, or other employment benefits. They are not protected by wage and hour laws or workplace discrimination laws. Therefore, an employer can save money by misclassifying employees as independent contractors.
Another reason for the misclassification of an employee is employment rights. State and federal labor laws do not protect Independent contractors. Therefore, some employers misclassify employees as independent contractors to avoid complying with employment laws.
What Can I Do if I’m Misclassified as an Independent Contractor in Arizona?
It could be a mistake on your employer’s part that you are misclassified. However, your employer may be taking advantage of you by misclassifying you as an independent contractor. The company may owe you money for unpaid benefits, overtime, and reimbursements. You may also have been denied rights under state and federal employment laws, including the Family Medical Leave Act.
If you question your classification and your employer continues to assert that you are an independent contractor or fires you because you questioned the classification, you have rights. Talk with a Phoenix employment lawyer about your legal options for wrongful termination and misclassification as an independent contractor.
Contact the Phoenix Employment Attorneys at Houk Employment Attorneys Today For Help With Your Case
For more information, please contact an experienced employment attorneys at Houk Employment Attorneys to schedule an initial consultation today. Our employment law firm is conveniently located near you. We have an office in Phoenix, AZ.
Houk Employment Attorneys
1850 N Central Ave Suite 2010, Phoenix, AZ 85004
(480) 569-2377
