Independent Contractor Status Misclassification?

Question

I work for a summer door-to-door alarm sales company and am paid as an independent contractor. No taxes, social security etc are removed from my check. The pay I receive is based solely on the number of alarm systems I set up. The company withholds 50%(ish) of my compensation to a check that will be given to me at the end of the summer, but which I will not receive if I fail to stay the entire summer. Now, the company "fired" me recently because we have a set schedule of hours that we must go knock doors for (as outlined by a set of rules and regulations). My question is, if they are able to micromanage like that, doesn't that classify me as an employee? What is the official stance of the requirements for "firing" an IC? If I have been misclassified, what can I do? Am I still eligible to receive my end of the summer check, since I did not leave voluntarily? Any help would be greatly appreciated.

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Answer 1

You have a number of options.  You can file a complaint with the state labor board.  They will give you an opinion regarding the withholding of your income as well as the IC status.  You have some options when it comes to filing your income tax return.  You can file an SS-8 to get a determination of your IC vs employee status.  You can also file a 8919 with your tax return and include the earnings from this employer as wages.  That will cut your FICA-medicare tax in half.  And should all of those not get the company to give in you can go to small claims court.  That should be the last resort as the others have a greater effect on the company.

Answer 2

You most likely are not entitled to the end of summer check.

For the tax situation, file a form SS-8 with the IRS asking for a determination of your status.

Answer 3

Here's a link to an IRS article explaining the difference in an independent contractor and an employee.  http://www.irs.gov/businesses/small/arti...  I have to question whether they can keep part of your money for not finishing the summer.  You could always take them to magistrate or small claims court if you can prove that you earned that money.  You could also contact a lawyer and ask for advice.

Answer 4

Lots of questions here.

1. Contractor vs. employer:  it has to do a lot with their degree of control over your work and how and when you do it.  It sounds like you are out and unsupervised, working hours that you can kind of set, etc. so they have a good case of calling you a contractor instead of employee.

You might want to read more about contractor vs. employee here: http://taxipay.blogspot.com/2008/03/w2-o...

2. Unfortunately, firing a contractor is easy.  You just tell them you don't want any more work done.  You probably signed something when you started with them about losing half the commission if you don't finish the summer, etc. so you might want to check your copy for any rights you have in that agreement, but I wouldn't expect a lot.

3. If you have been misclassified, you might want to read this about what to do about it, from the IRS:

http://www.irs.gov/businesses/small/arti...

4. Summer check?  Again that would be covered in their agreement with you that you probably signed when you started.