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The Practical Employer

The 12 Myths About Independent Contractor Misclassification

In all but the clearest of cases, assume that everyone you pay in exchange for services is an employee.
Earlier this week, the Department of Labor published a new

web guide on the issue of independent contractor misclassification

s.

WF_WebSite_BlogHeaders-11The DOL’s tagline, “Misclassification Affects Everyone,” along with the comprehensive content contained therein, makes it clear that this issue remains hot for the agency.

Contained the guide is a document titled, “Myths About Misclassification” listing 12 myths the DOL believes businesses commonly hold about independent contractors.

Myth 1: If I am an independent contractor under one law, I am an independent contractor under other laws.
Even if you are a legitimate independent contractor under one law, you may still be an employee under other laws.
Myth 2: If I am classified as an independent contractor, I am not eligible for unemployment insurance (UI).
You may still qualify for UI even if you are classified as an independent contractor.
Myth 3: I received a 1099 tax form from my employer, and this makes me an independent contractor.
Receiving a 1099 does not make you an independent contractor.
Myth 4: It does not make a difference if I am classified as an independent contractor or an employee.
If you are misclassified as an independent contractor, you may be denied benefits and protections to which employees are legally entitled. Misclassification also has negative effects on businesses.
Myth 5: I am an independent contractor because I signed an independent contractor agreement.
Signing an independent contractor agreement does not make you an independent contractor.
Myth 6: I am not on the payroll, so I am not an employee.
Even if you are not on the payroll, you may still be an employee.
Myth 7: I have my own employer identification number (EIN) or paperwork stating that I am performing services as a Limited Liability Corporation (LLC) or other business entity. This means that I am an independent contractor.
An EIN or paperwork stating that you are performing services as an LLC or other business entity does not make you an independent contractor.
Myth 8: My employer wants me to be an independent contractor, and that means I am not an employee.
Your employer cannot misclassify you for any reason.
Myth 9: I telework or work off-site, so I am an independent contractor.
You are not an independent contractor simply because you work off-site or from home.
Myth 10: I have been an independent contractor for years; this means I will continue to be an independent contractor.
Being a bona fide independent contractor in the past does not mean you will always be an independent contractor.
Myth 11: I operate a franchise. This means that I am an independent business.
Operating a franchise does not make you an independent contractor.
Myth 12: I am an independent contractor because it is established practice in my industry to classify workers like me as independent contractors.
“Common industry practice” is not an excuse to misclassify under the FLSA.

It remains to be seen if this issue is an enforcement priority for the Trump administration (the Magic 8 Ball says, “Very Doubtful”). Until you hear otherwise, however, the song remains the same — in all but the clearest of cases, assume that everyone you pay in exchange for services is an employee, and act accordingly.

Jon Hyman is a partner at Meyers, Roman, Friedberg & Lewis in Cleveland. Comment below or email editors@workforce.com. Follow Hyman’s blog at Workforce.com/PracticalEmployer.