The way people earn a living is changing. With the emergence of the gig economy, it is not unusual for people to have income from several different sources and work multiple jobs at once. Freelancing and independent contracting are on the rise, and many people have a main job while maintaining a side hustle during their down time.
At one time, people started with a company when they were young and expected to stay there for their whole careers. Now, millennials are likely to have an average of 12 jobs throughout their lifetimes, and they’re twice as likely to leave jobs in search of better offers than their older counterparts. With so many people working for companies as freelancers or independent contractors, it is now more important than ever to know what separates contractors from traditional employees and why it matters.
What is an independent contractor?
As defined by the state of Pennsylvania, to be classified as an independent contractor a worker must be “free from control or direction over the performance of the services involved” and the worker is “engaged in an independently established trade, occupation, profession or business.”
In short, an independent contractor is guaranteed more autonomy than a traditional employee in the tasks they perform, but the contractor is privy to fewer benefits.
Why does misclassification matter?
In the modern economy, the lines between independent contractors and employees often become blurred. Businesses who purposefully misclassify workers create an unfair advantage. They pay fewer taxes, have less payroll costs and are beholden to fewer rules regarding employment rights.
Conversely, a worker who is misclassified as an independent contractor may miss out on protection guaranteed under the federal Fair Labor Standards Act. This law guarantees employees receive at least minimum wage, are paid for overtime and other benefits. Independent contractors may also do the same work in the same space as employees, but not receive the same benefits.
Protect your rights
If you’re a worker and think that you have been misclassified as an independent contractor, you may be scared to come forward for fear of retaliation or losing your job. But employment laws exist to protect workers and to give them the rights they’ve earned.
Resources exist to report employer wrongdoing. The Pennsylvania Department of Labor and Industry has resources available for misclassified workers, and you may consider contacting an attorney with experience in employment law to take up your case.