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What is employee classification?

On Behalf of | Nov 15, 2022 | Employment Law For Employees |

When you work for someone else, you are categorized for taxation purposes as either an employee or an independent contractor. Sometimes, employers will misclassify you.

They might do this on purpose or accidentally. In either case, it is a detriment to you for the employer to misclassify you.

Employee classification

The classification as an employee is most beneficial to you. It allows you to receive certain employment benefits the employer must provide under the law, such as unemployment and workers’ compensation. It also means you likely will receive health insurance and paid time off.

For your employer, the employee classification mandates it to pay taxes on your behalf to the IRS. The employer must take taxes out of your checks and pay them to the government. In addition, the employer must abide by all federal and state regulations pertaining to employees, such as paying overtime.

Independent contractor classification

As an independent contractor, you get to choose when and where you will work. The employer has little control or say in how you do your job as long as you complete it within the agreed-upon terms. In addition, your employer will not take taxes out of your pay because that responsibility falls on you. You also do not have the right to benefits of any kind.

Ensuring your employer classifies you correctly is essential. You may lose out on benefits if the employer tries to classify you as an independent contractor when you are not. It is more common for this to happen because it is more beneficial to the employer to use contractors over employees. Remember that if your employer has complete control over your work, then the chances are you are an employee. You should report any misclassification.