Can An Employer Change Your Status from a Full-Time Permanent Employee to a Sub-Contractor Without Your Consent?
As a worker, the distinction between being a permanent employee and being a sub-contractor is significant for a number of reasons. Unfortunately, your employer is the one who decides which category you fall into; although, employers incorrectly categorize (intentionally or unintentionally) workers frequently. What happens if your employer randomly changes your categorization? For example, can your employer change your status from full-time permanent employee to a sub-contractor without your consent? The answer to that question is both “yes” and “no.”
Whether you are considered an employee or a sub-contractor is crucial for a number of important reasons. First, if you are considered a sub-contractor your employer will not withhold payroll taxes from your paycheck, requiring you to pay self-employment taxes at the end of the year. Second, as a sub-contractor you will not be entitled to company benefits such as medical insurance or paid sick/vacation days. Probably the most important reason why the distinction matters, however, is that as a sub-contractor you are not covered by your employer’s workers’ compensation or unemployment insurance. If you are injured on the job, for example, you will not be entitled to any compensation if your employer considers you a sub-contractor.
Can your employer change your classification? Yes, but you can challenge the change. Your employer can, in theory, classify everyone that works for it as a sub-contractor; however, if they are clearly not sub-contractors classifying them as such will ultimately result in challenges most likely. The I.R.S., for example, may challenge the classification if the company is audited or if the misclassification is brought to the attention of the I.R.S. Workers may also challenge their status as a sub-contractor. For example, if you are injure while on the job and your employer refuses to approve a claim for workers’ compensation benefits you have the right to appeal that denial. An administrative law judge will then look at your job duties and responsibilities, along with a number of other factors, and make a legal determination as to whether you are, indeed, a sub-contractor or are, instead, an employee.
The bottom line, therefore, is that your employer could re-classify you from an employee to a sub-contractor; however, you have the right to challenge that change. If your duties and responsibilities have not changed, you will likely prevail in your challenge as well; however, it is always best to consult with an experienced Conshohocken, Pennsylvania employment law attorney to discuss your situation before confronting your employer. Contact the employment law attorneys at Curley & Rothman, LLC by calling 610-834-8819 today to schedule your free consultation.