If you Were Recently Changed to a W-2 Employee, Your Employer Might Owe you Unpaid Benefits and Wages
Lots of companies applied for and received forgivable loans from the Small Business Administration under the Payroll Protection Program. But many found out they couldn’t spend all the money they needed to get forgiveness of the loan, and they started getting “creative.” One creative idea was that companies would make their independent contractors (who receive a 1099 for tax use) into employees (who receive a W2). Some companies were advised to do this by their banks and their CPAs. Whether you are an employee or independent contractor is not based solely on what your employer calls you.
If you were recently changed to a W-2 employee from your previous classification as an independent contractor who received a 1099, you may be entitled to multiple years of previously unpaid overtime or minimum wage compensation. Also, you may have been wrongfully denied retirement, health, and other benefits over the past years. You could be entitled to compensation or damages for being denied these benefits and wages in previous years. You should contact an attorney immediately to see if you are entitled to those back wages. In this post, I want to tell you how to keep records and what you need to know.
You were Either an Independent Contractor (1099) or an Employee (W-2), Not Both.
If you are paid for your work, you are an employee or an independent contractor. You cannot be both an independent contractor and an employee for the same employer. There are many factors that the law considers to decide if you are one or the other. There is a lot of gray area, but at the end of the day you are one or you are the other.
The most important factor that the courts and the government looks at is who controls you and your work. If you can answer “Yes” to even one of following questions, and you were previously paid as a 1099 independent contractor, you should contact an attorney to determine if you have any claims:
- Does someone at the business you are performing the work for supervise your work?
- Does someone at the business you are performing the work for tell you what hours to work?
- Does someone at the business you are performing the work for instruct you on how to do your work or what to do?
- Did the business that you are working for provide training for you as to how to perform your work?
- Do you receive a salary or hourly payment instead of a lump sum for your work?
- Does the business you are working for reimburse you for all work-related expenses?
- Does your pay stay the same regardless of how well you perform your work for the business?
- Can the business you perform work for terminate you before your tasks or your project is completed?
- Is the work you are performing for the business part of that business’s regular business activity (that business provides others with the services you are providing to it)?
- Does someone at the business you are performing the work for tell you how to do your work?
- Does someone at the business you are performing the work for control the method or manner that you do your work?
- Does someone at the business you are performing the work for tell you how, when, where, or what to do for your job?
- Does the business you are performing the work for provide the equipment or tools for you to use in performing your work?
- Are you prohibited from working for other people while working for the business you are currently working for?
- Has the business you are working for recently told you that you are now going to be paid as an employee or receive a W-2 for some or all of your work?
Even if your response is “No” to the vast majority of these questions, sometimes only one factor matters. So, if even one of these questions can be answered with a “Yes,” you should contact an attorney.
It is possible that your employer has been misclassifying you as an independent contractor for years when you were truly an employee. If so, they may have been wrongfully denying you years of overtime, minimum wage, health benefits, retirement benefits, or other benefits and compensation.
You Could be Owed Years of Back Compensation or Benefits.
If a business has misclassified you as an independent contractor before, when you were actually an employee, you may have been denied years of compensation and benefits. This could add up to tens of thousands of dollars, or more, of wrongfully denied compensation and benefits. Ohio and Federal law provide various rights in these situations, including rights to recover previously denied overtime and minimum wage (and potentially triple that amount), value of denied benefits that were improperly denied, attorney fees, and other compensation.
To get a good idea as to whether your rights have been violated, and whether you are owed substantial compensation, you should contact an attorney to discuss your situation and your rights. If you would like an attorney to reach out to you about this, please fill out the form on the “Contact” page, and someone from our office will be in touch shortly.