There are very strict laws put into place for the protection of employees from certain questionable practices done by employers. Most of these laws are stated in the Fair Labor and Standards Act, which although passed in the 1930s, has been frequently updated. Unfortunately, many employers in the United States are constantly trying to find ways around these laws. One common way employers try to evade employment laws is by mis-representing employees as independent contractors. Independent contractors are paid less than permanent employees, and so employers can pay them according to different, and often cheaper, pay scales.
Employees who are victims of mis-classification as independent contractors lack control over their work and are also denied the legal protection given to workers. In 2000, the Department of Labor found in a study of nine states that up to 30 percent of employees had be purposely mis-classified as independent contractors by their employers.
Mis-classification of workers by employers is usually done so that the employer can save money by refusing to give employees what they rightfully deserve. Rights that mis-classified employees are denied include:
- Access to unemployment insurance
- Overtime pay
- Protection from anti-discrimination laws
- The hourly minimum wage as set by the United States federal government
- Workers’ compensation and other types of protection given to employees
The practice of mis-classification does not only hurt the affected employees. A study in 2004 found that this practice cost the federal government as much as 34.7 billion dollars in taxes between 1996 and 2004.