What Freelancers and Contractors in NYC Need to Know About Misclassification

Choosing to work as an independent contractor or freelancer offers flexibility and independence, but there are also things you’ll sacrifice. This is why it can be problematic when a company tries to classify you as an IC or freelancer and you are not. You’ll lose out on protections and benefits to which you are legally entitled and in most cases, enjoy very little of the flexibility.

But how can you tell if you’re misclassified as an independent contractor in NYC? And what can you do if a company is trying to misclassify you?

New York has laws in place that protect people from misclassification. Here’s what you need to know.

What Does Misclassification Mean?

Misclassification occurs when someone who should is working as an employee is classified as an independent contractor. They’re performing the work and have the obligations of an employee, but they aren’t being given any of the protections or benefits.

Keep in mind, simply being paid with a 1099 instead of a W-2 does not automatically make you an independent contractor. New York’s Department of Labor explains that the actual relationship between the worker and the business matters, particularly the amount of supervision, direction, and control exercised over the work.

In other words, your job title or paperwork is not necessarily the final word on your legal status.

How Can You Tell if You May Be Misclassified?

There is no single factor that determines classification in every situation. New York looks at the overall relationship between the worker and the business. Factors that may point toward an employment relationship include the employer:

Determining when, where, and how you work

• Setting your hours or pay
• Providing equipment
• Directly supervising your work
• Requiring meetings or training
• Retaining the right to hire and fire you

An independent contractor generally has greater control over how the work is performed and is operating an independent business rather than functioning as part of the hiring company’s regular workforce.

The distinction can be especially difficult for freelancers whose arrangements fall somewhere in between. You may have some flexibility while still being subject to significant control by the company.

Why Does Classification Matter?

Misclassification can affect more than your paycheck.

Employees may be entitled to protections that do not apply in the same way to independent contractors. New York identifies unemployment insurance, workers’ compensation, Social Security, tax withholding, minimum wage, and overtime among the protections that can be affected by misclassification.

There can also be practical financial consequences. A contractor may be responsible for expenses and taxes that an employee would not ordinarily have to handle in the same way. If you have spent months or years believing you were properly classified, discovering that you may actually have been an employee can be unsettling.

You may also worry about what happens to your relationship with the company if you raise the issue.

What Should You Do If You Suspect Misclassification?

Start by keeping records. Save your contract, pay records, invoices, emails, text messages, schedules, instructions from supervisors, and other communications that show how your work was actually performed.

Then consider having the arrangement reviewed by an employment attorney before confronting the company or making a major decision about your job.

You may be tempted to quit immediately, particularly if you feel taken advantage of. But leaving can affect your income, references, professional relationships, and potential legal claims. Getting advice first can help you make a decision based on your circumstances rather than frustration or fear.

What About Freelancers Who Are Paid Late?

Misclassification is not the only legal concern for freelancers in New York City.

The Freelance Isn’t Free Act provides specific protections for covered freelance workers, including a right to a written contract for qualifying agreements worth $800 or more and a right to be paid on time and in full. The law also protects freelancers from retaliation for exercising their rights.

Importantly, these freelance protections do not themselves determine whether someone is legally an employee. Worker classification requires a separate analysis of the relationship.

You Do Not Have to Figure It Out Alone

Learning that you may have been misclassified can raise difficult questions. You may be concerned about losing your job. You might need to protect your reputation in your industry or avoid losing a valuable client.

Your concerns are real. A legal claim is only one part of the decision. Understanding what you may be entitled to, and how to protect your professional interests while pursuing those rights, is equally important.

How can you tell if you’re misclassified as an independent contractor in NYC and what can you do about it? Borrelli & Associates, P.L.L.C. can help. We’ll explain whether your working relationship may violate New York employment laws and what steps may be appropriate. Contact us to schedule a consultation and discuss your situation.