Across Michigan, workers are being denied basic employment protections through misclassification. This happens when companies improperly label employees as “independent contractors.” This practice costs workers minimum wage and overtime protections, workers’ compensation coverage, unemployment benefits and more.
Misclassification often affects delivery and rideshare drivers, rideshare workers, home repair contractors and gig economy workers. Knowing your true employment status is essential to claiming the wages and protections you deserve.
Why companies misclassify workers
The financial incentives are substantial. When employers classify workers as independent contractors instead of employees, they avoid:
- Paying time-and-a-half for overtime hours
- Contributing to Social Security and Medicare taxes
- Providing workers’ compensation insurance
- Offering health benefits or paid leave
- Paying into unemployment insurance
This misclassification can cost workers thousands annually while the company pockets the savings.
Are you really an employee or contractor?
Courts use various assessments to determine your true employment status. While Michigan uses different tests for different employment laws, they all focus on the degree of control the company has over your work. Courts consider several factors such as:
- Does the company control when, where, and how you work?
- Are you doing work that’s central to the company’s business?
- Do you have a real opportunity for profit or loss based on your decisions?
- Can you work for the company’s competitors at the same time?
- Do you invest in your own equipment and business?
In other words, if the company sets your schedule or pay rates, requires you to use their equipment or wear their uniform, prevents you from hiring helpers or provides extensive training, you’re likely an employee, not a contractor.
Your legal options
Misclassified workers have the right to recover what they’ve lost. This may include back pay for unpaid overtime wages, reimbursement for the employer’s share of payroll taxes and compensation for minimum wage violations. Workers can recover back wages for violations dating back several years, with the exact timeframe depending on the type of claim.
Misclassification is both unfair and unlawful. If you recognize these warning signs in your work situation, speaking with an attorney and taking action can help you recover what you’re owed while holding employers accountable.