Freelancer or employee: What makes you a contractor?
TLDR: If you work 40 hours a week, you use primarily your employers equipment/facilities, and your employer controls how and when you work, you are NOT a contractor you are a full time employee with the rights and privileges of one. If your company is refusing to recognize this, they are violating the law and you can report them to the IRS.
I have been a freelancer for a while now. My earliest positions as a contractor started with internships and short term projects, and those things made sense as freelance work to me. I think that this sort of flexibility, and the ability to pursue contracts at multiple companies can be a great career solution for many motivated people.
The misclassification of contractors is a rising issue and is extremely exploitative, harming contractors like me. When I am misclassified as a contractor and forced to work 40 hours a week under the supervision of an employer, I am not able to pursue my other contracts and I get fucked over by the US tax code because my employer is defrauding the government. Shady businesses that engage in this illegal activity often feel few to no consequences because workers don’t go through the effort of reporting and taking action against these criminal employers.
So what happens when an employer demands you work 40 hours a week (or more) but labels you a freelancer/subcontractor? Well the truth is, nothing unless you do something about it. And if you don’t do something about it, what is to stop your employer from hurting more folks like you in the future?
What can I do?
First and foremost, document EVERYTHING. Document all your communications with your employer about your classification and payments. These are prime communication evidence should you decide to take your employer to court, and in the investigation of a reported employer by the IRS or other government revenue institution.
Companies will exploit you if you let them. The history of capitalism is pretty clear on this. Despite the U.S Supreme Court’s ridiculous decision in Citizens United, corporations are not people. People have ethics, they have morals, and they exist for more than the generation of capital. If corporations are people, they are sociopathic people who only care about profit and definitely not workers. When a company labels you as a contractor but requires you do a full time job, they are stealing from you, coercively harming workers, and defrauding the government. Don’t take my word for it though, according to the Internal Revenue Service of the USA,
“Under common-law rules, anyone who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed.”
If you are working 40+ hours a week, the company decides when, where, and how you work, and/or they coercively force you to work in a particular way or at a particular time, then you are considered a Common Law Employee and your rights are being violated. Under these conditions, legally your employer owes you benefits and social security tax.
As a contractor working 40 hours a week, you are actually the most screwed of anyone at your work place! The fulltime peers around you are getting paid more, because they get benefits and employer tax payments and you don’t! Yet they are treating you exactly the same! They can fire you without cause, they provide no health insurance, paid time off, workers comp, and you pay double the social security taxes because the company has mislabeled you as not an employee, and yet they block you from gaining new opportunities by demanding a fulltime work day and pretending you are hourly wage worker.
Many mislabeled contractors receive a lower day rate than their correctly labeled contractor counterparts and are forced to operate within the employers questionable and shady gray areas where they feel like they have no power to speak up for themselves. Companies operate in these gray areas on purpose, because they want to control you and your ability to bring any action against them. Despite your contract and assigned project, they expect you to provide flexibility on what project you are working on and when. You are obligated to function as if you are a fulltime employee, which destroys your ability to seek out other contracts or to fulfill those contracts because your employer is functionally coercing you from working anywhere else by requiring and enforcing an illegal 40 hour work week.
Misclassification of freelancers is a common issue, especially in the media and technology industries. In the past year I have worked 3 different jobs which mislabeled my full time commitment, 40 hour a week positions, as a contract jobs. Each of these positions have required 40 hours of work, and have controlled how and when the work. It feels like there is little you can do in response to this exploitation, but there is something you can do.
1. Report them to the IRS
The IRS can reclassify your income, so even if you can’t get your time back, you might be able to get the discount on your taxes the you are entitled to. According to the IRS,
“Workers who believe they have been improperly classified as independent contractors by an employer can use Form 8919, Uncollected Social Security and Medicare Tax on Wages to figure and report the employee’s share of uncollected Social Security and Medicare taxes due on their compensation.”
2. Talk to a lawyer about your options to pursue legal action
If you are a freelancer and someone is doing this to you, they are forcing you to lose money and contracts. There might be grounds for legal action!
3. Report them to your local labor board (this may or may not be anonymous)
All labor boards are very interested in labor violations (it is their job). Reporting to one of these agencies might provide the pressure you need to get justice from your employer.
The worst thing we can do is allow them to continue to exploit you without at least saying something. I know that all of us rely on our income to survive, but that’s why its important to stand up for our labor rights in the first place. A hundred years ago, the capitalists killed people in the streets for standing up to their workers rights. Workers have died for our right to stand up for our labor rights, so don’t be afraid to add your voice to this important conversation.
When we all stand against this exploitation and explicitly illegal behavior together, maybe the courts and companies will be forced to listen. You don’t owe them your own exploitation, you never did.
