Being misclassified as an independent contractor is not a technical issue. It directly affects how much you are paid, the benefits you receive, and whether your employer is complying with the law. Many Ohio workers accept a 1099 classification without realizing it may be improper based on the way their job actually functions. Knowing what to look for is the first step toward correcting it.
Employers can classify their workers as either employees or independent contractors. The distinction is essential because classification directly impacts wage, hour, and overtime requirements. Misclassification can deny workers their rightful compensation. Employers may be tempted to misclassify workers to reduce employment costs.
The Fair Labor Standards Act (FLSA) sets the federal standards for worker pay protections. The IRS also requires correct classification for tax purposes. The IRS uses a common law test to determine worker classification. It does not simply accept what an employer labels someone.
Employees are defined under ORC 4111.14(B)(1). A worker is an employee if they are performing services under their employer's control and direction. They are an independent contractor if they provide services under contract. They have greater autonomy when performing their role.
Worker misclassification claims are determined by the Ohio courts using the economic reality test. The test uses six factors to determine employment status.
Employees who suspect that they have been misclassified should look for the common signs. The more control an employer has, the more likely it is that you are an employee and not an independent contractor. Pay attention if your employer tells you where, when, and how to perform your work. Employee control could require you to meet training requirements and follow company-wide policies and procedures. You could be supervised or managed in a manner similar to other workers classified as employees.
You may also be prevented from typical independent contractor activities. For example, the company sets your hours and doesn’t allow you to choose your own schedule. You cannot hire substitutes or delegate your work without approval. The company doesn’t permit you to seek other clients or outside work. It’s also helpful to examine how you operate in your current employment. Perhaps the company pays you hourly or weekly instead of by milestone or project. The work you’ve been hired to perform is ongoing and indefinite with no clear end date. The company may reimburse you for your expenses and provide you with all of the necessary materials to perform your job.
While every situation is different, there are some common steps to take if you are misclassified as an independent contractor. Begin documenting your working relationship with the company. Describe the specific tasks you are assigned, due dates, and how they align with the employer’s business. Take note of the level of control and supervision the company has over how you perform the work, hours, methods, and tools. Record details about your compensation, including whether taxes are withheld. Include the duration of your working relationship, as long-term engagements may suggest employee status.
If you have concerns about being misclassified, your first step is to talk with your employer. Professionally and politely bring up your classification concerns. Sometimes a misclassification happens by mistake or misunderstanding. In other situations, a working relationship changes, necessitating a change in classification. Open communication is an easy fix. While communicating with management or HR can be a casual conversation, always request company responses in writing. That way, you have a record of the conversation and can use it later as evidence if needed.
Speaking with an employment lawyer will help you understand your legal options. The lawyer will review your documentation and evaluate if you have a viable case. If the lawyer determines you have a claim, they can represent you in negotiations with your employer. They can also help you prepare your complaint with the appropriate government agencies. If the issue isn’t resolved through these avenues, your lawyer can also assist with filing a lawsuit and pursuing litigation.
Workers in Ohio can file a complaint with the Ohio Department of Job and Family Services (ODJFS). The process begins with submitting a complaint and documentation of the working relationship. The agency will investigate the employee’s claim and issue a decision about employment status.
Once it’s determined that you are misclassified as an independent contractor, there are several remedies available. An employment attorney can help you calculate the full value of your damages. Remedy can begin with recovering unpaid wages, overtime, and benefits. Employees are entitled to benefits, including health insurance and retirement contributions. The IRS also provides a recovery process for workers who challenge their classification. Submitting Form SS-8 enables workers to request an official determination of their employment status. If the IRS rules in the worker’s favor, the employer may be required to adjust tax withholdings and pay back taxes.
Being labeled an independent contractor does not make it legally accurate. Ohio workers are often misclassified, denying them overtime pay, workers’ compensation coverage, and unemployment benefits. Knowing the signs of misclassification and acting early can make a meaningful difference in the outcome of your claim. Our Ohio employment law team represents workers who have been improperly classified and helps them pursue compensation and compliance. If you have questions about your work status, reach out today to discuss your options and understand where you stand.
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