What to Do If You Are Misclassified as an Independent Contractor in Ohio

Employee misclassification is widespread in Ohio, affecting workers across various industries. Misclassification occurs when employers label individuals as independent contractors instead of employees, depriving them of crucial legal protections and benefits. If you suspect you have been misclassified, understanding your rights and the steps to address this situation is essential.

Understanding Employee vs. Independent Contractor Status in Ohio

The distinction between employees and independent contractors hinges on the degree of control and independence in the working relationship. These definitions are crucial for determining your rights under Ohio law:

Employee: Defined under ORC 4111.14(B)(1) as a person engaged to perform services for an employer under their control and direction. Employees are entitled to protections such as minimum wage, overtime, unemployment insurance, and workers’ compensation.
Independent Contractor: Typically, self-employed individuals providing services under contract. Independent contractors operate with greater autonomy but lack many of the legal protections afforded to employees.

Economic Reality Test

In Ohio, courts often use the “economic reality test” to determine employment status. This test evaluates the nature of the work relationship based on several factors, including:

Control Over Work: Does the employer dictate how, when, and where tasks are performed?
Opportunity for Profit or Loss: Can workers influence their earnings through their efforts?
Investment in Equipment: Does the worker provide their own tools, materials, or equipment to perform the job?

These factors collectively assess whether the worker is economically dependent on the employer or is operating as an independent business entity.

How Misclassification Can Impact You

Financial and Legal Consequences

Being misclassified as an independent contractor can result in significant financial and legal hardships, including:

Loss of Benefits: Employees are entitled to unemployment insurance, workers’ compensation, and overtime pay. Misclassified workers may be denied these protections.
Tax Implications: Independent contractors are responsible for paying their FICA taxes, including Social Security and Medicare contributions. This can result in higher tax liabilities compared to employees.
Limited Job Protections: Employees often have access to anti-discrimination protections and the ability to seek recourse for wrongful termination. Misclassified workers are typically excluded from these safeguards.

Common Industries Where Misclassification Occurs

Certain industries in Ohio are notorious for misclassifying workers to cut costs. Common sectors include:

Construction: Many construction workers are improperly labeled independent contractors to avoid paying workers’ compensation and other benefits.
Trucking: Drivers are often classified as contractors despite meeting employee criteria under the economic reality test.
Gig Economy Roles: Delivery drivers, rideshare operators, and other gig workers frequently face misclassification issues.

Relevant Ohio Laws Protecting Workers

Ohio provides several statutory protections for workers who have been misclassified:

Ohio Minimum Wage Laws

Under ORC 4111.14, employees are entitled to Ohio’s minimum wage and overtime pay for hours worked over 40 a week. Misclassified workers can file claims to recover unpaid wages if they meet the criteria for employee status.

Workers’ Compensation Rights

Even misclassified workers may be eligible for workers’ compensation benefits under ORC 4123.01. Employers cannot avoid their obligation to provide workers’ compensation by misclassifying employees as independent contractors.

Unemployment Insurance Protections

Misclassified workers who lose their jobs may still qualify for unemployment benefits if they demonstrate employee status under Ohio law. Employee status ensures financial stability while seeking new employment.

Steps to Take if You Suspect Misclassification

Document Your Work Relationship

The first step in addressing misclassification is gathering evidence. Key details to document include:

Nature of Tasks: Describe your specific duties and how they align with the employer’s business.
Supervision: Note whether the employer controls your work schedule, methods, or tools.
Payment Terms: Record details about your compensation, including whether taxes are withheld.
Length of Engagement: Include the duration of your working relationship, as long-term engagements may suggest employee status.

File a Complaint with the Ohio Department of Job and Family Services (ODJFS)

Ohio workers can file a complaint with the ODJFS if they believe they have been misclassified. The process typically involves:

Submitting documentation of your work relationship.
Providing evidence of misclassification, such as pay stubs or employment contracts.
Allowing the agency to investigate and determine your proper employment status.

Seek Legal Assistance

Consulting an experienced employment attorney is critical for parsing through the complex issues of misclassification cases. An attorney can:

Assess the strength of your claim.
Represent you in negotiations with your employer or before government agencies.
Pursue litigation if necessary to recover lost wages and benefits.

Potential Remedies for Misclassification

Back Wages and Benefits

Misclassified workers can recover unpaid wages, overtime, and other benefits through legal action. Such benefits include compensation for:

Overtime hours worked beyond 40 per week.
Unpaid minimum wage.
Employees are entitled to benefits such as health insurance and retirement contributions.

IRS Reclassification

The IRS offers a process for workers to challenge their classification. By submitting IRS Form SS-8, workers can 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.

Legal Action

Workers can pursue claims under state or federal labor laws. The legal actions could include:

Filing a Fair Labor Standards Act (FLSA) lawsuit for wage and hour violations.
Pursuing claims under Ohio labor laws for unpaid wages, benefits, and workers’ compensation.
Seeking damages for wrongful termination or retaliation related to the misclassification claim.

Employers may often seek to settle misclassification disputes to avoid lengthy litigation. A skilled attorney can negotiate a favorable settlement, including back pay, damages, and legal fees.

Consult a Skilled Ohio Employment Lawyer Today

Misclassification as an independent contractor can have serious financial and legal repercussions. Dealing with the legal issues of Ohio labor laws requires skilled legal guidance. A knowledgeable employment attorney can:

Help you determine whether you’ve been misclassified.
Advocate for your rights before government agencies or in court.
Maximize your recovery of lost wages, benefits, and damages.

At Watson Kuhlman, LLC, we are committed to protecting the rights of Ohio workers in Cleveland and the state of Ohio. Don’t wait to take action if you suspect you’ve been misclassified.

Call us today at 216-208-7858 to schedule a consultation and explore your options for justice.