Your classification as a worker in Rhode Island and Massachusetts matters. Whether it is as a full-time employee, part-time employee, or independent contractor, there are certain federal and state rights and responsibilities that flow from these respective designations. When employers intentionally or mistakenly get it wrong, it is the worker who suffers most.
At ODU Law Firm, our employment lawyer in Rhode Island and Massachusetts will inform you of your rights and advise you whether your position as a worker has been misclassified. If it has, we will work with you and the employer to correct the harm you have sustained. We work hard, so that your hard work is compensated adequately and in accordance with the law. Contact us today at (401) 209-2029 to schedule a free consultation and to learn more about employee classifications, damages when misclassified, and what to do about it.
Worker Classifications in Rhode Island and Massachusetts
Classifications are a way to organize workers based on federal and state employment laws, including employee benefits and taxes. There are pros and cons to each classification, which is why it is important the worker is appropriately classified. Misclassification can harm the worker, putting them at a disadvantage and triggering potential legal action.
The two basic types of classifications are:
- Employee; and
Each of these types have sub-types, all of which have their own characteristics and significance in terms of employment laws, benefits, and taxes.
When deciding whether a person is an employee, the IRS looks at the extent of control the employer has over the employee. If the employer controls what the worker does and how they do it, then the worker should be classified as an employee, not an independent contractor. Employees can be full-time or part-time, temporary or permanent. There are other characteristics of what establishes a worker as an employee versus an independent contractor.
Characteristics of Employee Classification
- The employer is liable for employee errors and/or accidents
- The employer controls the means and manner of work
- The employer trains the employee to perform the job
- The employer sets the the work hours for the employee
- The employer purchases materials and supplies
- The employer provides and controls equipment and tools
- The employer can require specific attire while at work (e.g., uniforms)
- The employer hires and fires employees
- The employer determines the wage, salary, or commission
- An employee accepts the wage, salary, or commission determined by the employer
- An employee often works at the employer's business location
- An employee usually works for one employer
- An employee can typically quit working for an employer at any time
Employees are also either exempt or non-exempt. To say an employee is exempt means that they are exempt from the Fair Labor and Standards Act (FLSA). There are certain rules regarding who can qualify as an exempt employee. Typically, exempt employees are paid a salary, and employers are not required to pay overtime. On the other hand, non-exempt employees are paid an hourly wage, which must be at or more than the state or federal minimum wage, and the employer must pay overtime.
Contractors are hired for a certain period of time or for a certain project. For those contractors hired for a period of time established by a contract, their working hours may vary per the contract. These hours can be less, equal to, or more than a 40 hour week. At the termination or conclusion of a contract, there may be opportunities to renew it. Under these circumstances, contractors are considered part of the company's payroll and so are nonexempt and qualify for certain benefits.
Independent contractors, on the other hand, who are more often hired for a project or on a freelance basis, are neither exempt nor nonexempt. Independent contractors are considered to be self-employed and:
- Free from direction and control of the employer
- Possess necessary or specific skills and training
- Have a separate business location
- Perform services for multiple customers
- Establish own work hours or schedule
- Determine own price for contracted services
- Provide own equipment and tools used to complete the job
- Supply own materials needed to do the job
- Are personally liable for errors and/or accidents
- File self-employment taxes
- Can hire and fire workers, typically sub-contractors
- Can legally complete each contract.
Independent contractors are ineligible for employee benefits, which is why employers often prefer them.
These differences and the variations in what constitutes a non-exempt contractor, exempt contractor, or independent contractor is where confusion and misclassifications often arise.
Worker Misclassifications in Rhode Island and Massachusetts
Worker misclassification is about inappropriately classifying a worker as an employee or independent contractor. This misclassification can lead an employer to:
- Misrepresent the type of work to be performed by the worker
- Under-report payroll
- Under-report the number of employees
These employer actions or inactions often occur because the employer has misclassified a worker as an independent contractor and not as an employee.
Consequences of Worker Misclassification
Some people choose to work as a freelance contractor because it gives them the kind of freedom and flexibility they need or want in their professional and personal lives. Freelance contractors, however, do not receive the same kinds of benefits and protections that employees receive. So, if you are legally an employee but the employer treats you like a freelance contractor, that's a problem.
The consequences you face from worker misclassification are many, but they vary in degree depending on the circumstances. Below are some of the most common forms of harm a misclassified worker may experience.
Inaccurate and Unfair Compensation
Classification as an employee or an independent contractor correlates directly to how a person is paid. An employee on the payroll receives wages that must meet the minimum state or federal standard. Taxes are withheld from employees' paychecks. Plus, non-exempt employees must receive overtime when they work more than 40 hours a week.
Financial Harm for On-the-Job Injuries
Almost all states require employers to provide workers' compensation to their employees. They do not, however, mandate that the employer provide this type of insurance coverage to independent contractors. When a worker, who is classified as an independent contractor, is injured during the course of their work, the employer will deny workers' compensation. The worker is left to cover the costs of their injury on their own.
Financial Harm for Mistakes or Accidents
Employers are often vicariously liable for the mistakes or accidents their employees make while on the job. So, when those mistakes or accidents lead to property damage or bodily injury to another person, the employer can be held financially responsible. When the worker is an independent contractor, however, the worker is liable while the employer is not.
Unpaid Family Medical Leave
The Family Medical Leave Act (FMLA) allows employees to take time off under certain situations, usually to recover from a medical condition or to care for a family member recovering or suffering from a medical condition. FMLA ensures that the employee's job is protected for a certain amount of time while on leave. Independent contractors are not covered by the FMLA and have no protections to return to the job or project.
Unpaid Paid Time Off
Whether it is for vacationing, running errands, participating in a child's school activity, or recovering from an illness, freelance workers do not get paid when they take this time off. Employees often have a certain amount of agreed-upon time to take off for vacation or personal reasons. Likewise, many employees often benefit from paid holidays while independent contractors do not.
Common Reasons Employers in Rhode Island and Massachusetts Misclassify Employees
Many times, misclassification of an employee results from an oversight, error, or negligence. The misclassification is not intentional and can be – more often than not – corrected without litigation.
Other times, however, misclassification may have been intentional. Reasons are many, but often it is about the employer's bottom line: Saving them money to the worker's detriment by avoiding paying benefits or taxes.
Misunderstanding the Law
Some states' definitions and requirements for independent contractors and employees differ from federal law, and that alone can be confusing and lead to misclassification. Other times, it really is an issue of just not knowing or understanding. In other cases, it may be that the job changes but the classification is not changed along with it.
Avoid Paying For Benefits
One of the reasons why employers misclassify employees – intentionally – is to avoid paying for certain benefits. Employers are required to pay benefits for employees that they are not required to pay for independent contractors. These benefits typically include workers' compensation insurance, unemployment insurance, life insurance, disability insurance, and health insurance.
Avoid Paying Taxes
Classifying someone as an independent contractor rather than an employee also allows an employer to avoid paying certain taxes. An employer must withhold certain taxes from an employee's paycheck, including Social Security, Medicare, and income tax. The employer must also pay, when applicable, certain taxes for employees. This can include:
- Social Security
- Required federal & state taxes
- Unemployment tax
Depending on your jurisdiction, an employer may have other local taxes to pay for employees that are not required for independent contractors.
Remedies for Employee Misclassification in Rhode Island and Massachusetts
When an employee has been misclassified, some options are available to remedy the situation. The first step is to speak with the employer regarding the misclassification. If it was a mistake on the employer's part, and the employee has not suffered a loss, it may be a simple fix. If, however, the employer intentionally misclassified the employee or if the employee faces a loss due to the misclassification, speaking with the employer may not be enough.
The best path to address an employee misclassification is to contact an employment law attorney at ODU Law Firm. Our employment law attorney in Rhode Island and Massachusetts knows the applicable state and federal laws and handles these types of cases on a regular basis. When necessary, we will file a lawsuit to ensure you receive any and all available compensation and benefits.
As your lawyer, we will work towards a remedy right for you, and that could include:
- Proper employee classification
- Payment for lost wages and overtime
- Penalties for lost wages and overtime
- Compensation for certain benefits and retirement contributions
- Compensation for emotional distress and punitive damages, in many jurisdictions
Time is of the essence, however, and so if you believe your worker status is misclassified and harming you, you should act now. Under federal statutes of limitations you have two years to seek unpaid wages or overtime in an action brought under FLSA. If you also seek unpaid retirement contributions, an action would be brought under ERISA, and that grants you an additional year. If you seek action under state law, you may have more or less time to act.
How Can an Employment Law Attorney Help Me in Rhode Island and Massachusetts?
The consequences of worker misclassification are significant. The employer will likely not advise you of your rights; you have to figure it out yourself. Even when you realize your employment is misclassified, you may not speak up about it because you fear risking your job.
At ODU Law Firm, we help clients understand their rights, identify worker misclassification, and seek proper remedies. We will be there with you each step of the way. An employer cannot terminate your position or retaliate against you for standing up for your rights – but that does not mean they will not try. We will provide solid advice, investigate thoroughly, negotiate competently, and guide you through the process to ensure your employee rights are upheld and that the company complies with relevant laws and rules.
Contact an Employment Law Attorney in Rhode Island and Massachusetts Today
At ODU Law Firm, we are here to ensure that your hard work is compensated in accordance with the law. Contact our employment lawyer in Rhode Island and Massachusetts today by filling out the online form or calling us at (401) 209-2029. We will schedule a free consultation and help you secure a just and fair outcome for worker misclassification.