How free are freelancers?
More than ever, firms face increased risks of misclassifying workers as independent contractors when the law regards them to be employees. A company’s misclassification of its contractors increases the likelihood of Department of Labor audits and individual or class action lawsuits by workers claiming they are entitled to overtime and other employee benefits, even though they were paid as independent contractors.
In fact, several PR firms have recently received Labor Department audits for both a particular individual as well as "all similarly situated workers." These audits, which frequently lead to fines and penalties, can be triggered easily by just one disgruntled "independent contractor," by an anonymous complaint, or by a contractor who files for unemployment benefits claiming he or she should have been treated as an employee.
The greater the degree of direction and control the PR agency exercises over the method and means by which the worker performs his or her job duties, the more likely the worker – even one who is paid as a consultant and receives a 1099 Form – will be classified as an employee.
By Michael Lasky
Published: March 20, 2015