Misclassification as Independent Contractors

Misclassified Workers Lose Big and Employers Know It

Being told you’re an independent contractor when you’re really not can have a big impact. It usually sounds like a compliment at first. You’re your own boss, right? But in reality, misclassification often means fewer rights, more stress, and less money. And employers know it. Misclassified workers are everywhere in New York, and it’s costing them more than just benefits, it’s costing them fairness.

At Horn Wright, LLP, our employment law attorneys focus on helping workers who’ve been mislabeled and underpaid. If you’ve been treated like an employee but called a contractor, we’re ready to set the record straight and help you recover what you deserve.

Under the federal Fair Labor Standards Act (FLSA) and New York Labor Law §193 and §198, if a worker is economically dependent on the business, they are likely an employee, no matter what their contract says. New York courts and agencies use this standard to identify wage theft disguised as "independent contracting."

When you’re misclassified, you lose important protections. You no longer qualify for minimum wage guarantees or overtime. Taxes are pushed onto your shoulders instead of being withheld properly by your employer.

How New York Determines Employee vs. Independent Contractor

New York takes a worker’s full situation into account. Titles don’t mean much. The key question is: who controls your work? If the company controls your hours, location, and how the work is done, chances are you’re an employee.

The New York State Department of Labor uses a multi-factor test based on case law and regulations. Some of the key factors include whether you use your own tools, whether you decide your hours or are assigned a schedule, and whether you can take on other jobs without asking for permission.

Under New York Labor Law and the FLSA, control is everything. If a business tells you what to do, when to do it, and how to do it, then legally you are not an independent contractor, regardless of what your paperwork says.

Signs You Are Being Misclassified Under New York Law

Most people don’t realize they’re misclassified until something goes wrong. A denied benefit. A missing paycheck. A sudden tax bill. But the signs often show up early, especially if your job feels more like traditional employment than freelance work.

Here are some indicators you might be misclassified:

• You’re told what hours to work and can’t change them. True independent contractors usually set their own schedules. If you have to punch in at specific times and get approval for breaks or time off, you’re functioning more like an employee.
• You’re supervised on-site just like regular employees. If a manager oversees your daily tasks and evaluates your performance, that’s direct control. Independent contractors typically work on a project basis with less oversight.
• You get paid on a regular cycle without submitting invoices. Independent contractors usually bill for their time or services. If you receive weekly or bi-weekly paychecks automatically, it suggests you’re on an employee payroll system.

Just because your pay goes through a 1099 form doesn’t make it right. If you act like an employee and are treated like one, then that’s what the law considers you.

How Employers Benefit from Mislabeling Your Job

Let’s be clear. Employers know what they’re doing. Classifying someone as a contractor saves them money. They skip unemployment insurance, workers' comp contributions, and payroll taxes. But all those savings come at your expense.

Under the FLSA and NY Labor Law §193, misclassification is considered a form of wage theft. When employers avoid their obligations, they also avoid paying fair wages, overtime, and legal benefits.

This misclassification often means your tax burden increases, your job stability decreases, and you lose safety net protections. The company gets all the reward while you shoulder all the risk.

Rights You Lose When You Are Labeled a Contractor

When you’re misclassified, it doesn’t just cost you wages. You lose entire categories of legal protections. That can include benefits most people take for granted.

Workers labeled as contractors typically miss out on:

• Minimum wage and overtime pay, even when they work long hours. New York and federal law guarantee these protections to employees, not independent contractors.
• Unemployment benefits when the job ends. Since your employer never paid into the system for you, you may be left without support between jobs.
• Workers’ compensation coverage in the event of injury. If you're hurt on the job, you may have to cover your own medical bills without legal help.

You also may not qualify for paid family leave or disability benefits under the New York State Paid Family Leave Law. It’s a cascading effect that leaves workers exposed when they need help the most.

Legal Tests New York Uses to Assess Worker Status

New York doesn’t rely on a single test to determine worker status. Instead, it uses several depending on the context, wage claims, unemployment benefits, or taxes.

For wage disputes, the key test is the "economic realities" test under the FLSA. This test looks at how much control the business has over your work, whether your services are integral to the business, your opportunity for profit or loss, and how independently you actually operate.

For unemployment claims, the NYSDOL uses a similar but slightly different "control test." This one focuses on whether the employer directs when, where, and how you work. The more supervision involved, the more likely you are an employee.

Steps to File for Reclassification in New York

If you think you’ve been misclassified, you can challenge it. And you don’t have to do it alone. Workers in New York have options to get reclassified and recover what they lost.

You can start by filing a complaint with the NYSDOL under Article 6 or 19 of the New York Labor Law. It helps to gather documents like pay stubs, contracts, text messages, or schedules. Then, talk to an employment attorney who knows how to fight these cases.

The NYSDOL may investigate and order your employer to correct your classification and pay back wages. If the violation is extreme, you can also sue in civil court.

What New York Law Lets You Recover After Misclassification

Once your classification is corrected, you can take legal action to recover what you were denied. And the law gives you a wide range of tools to do just that.

Under NY Labor Law §198 and the FLSA, misclassified employees can recover unpaid minimum wage and overtime pay, plus liquidated damages often equal to your unpaid wages. You may also be entitled to interest and reimbursement for attorneys' fees and legal costs.

Some workers also qualify for missed benefit contributions, like healthcare or retirement funds. And if your employer retaliated against you for speaking up, additional damages may apply.

How New York’s Worker Classification Differs from Vermont’s System

While both states protect workers, New York and Vermont use different standards. New York uses the "economic realities" test and broader state labor laws. Vermont follows a stricter version of the "ABC Test," which puts the burden on the employer to prove someone is truly independent.

Under Vermont’s Title 21, Section 1301(6)(B), a worker is presumed an employee unless they meet all three of the ABC factors. That includes being free from control, doing work outside the employer's usual business, and operating their own independent trade.

New York offers more flexibility in proving employee status, especially in wage disputes. But Vermont's rules can be easier to apply in black-and-white cases. If you've worked in both states, or remotely across borders, you may be able to file in the one that offers the strongest protection.

Horn Wright, LLP, Helps You Reclaim the Title and Pay You Deserve

Being misclassified doesn’t mean you give up your rights. It means your employer broke the law. Our dedicated employment law attorneys know how to fight misclassification in New York courts and state agencies. If you’re ready to work with a firm that knows how to challenge unfair classifications head-on, we’re ready to go to work for you.