Unemployment benefits exist to help people who have lost their jobs through no fault of their own. Typically, these benefits are available to employees whose employers fired them for reasons other than misconduct or let them go because of downsizing, not to workers who were correctly classified as independent contractors.
The rise of the gig economy has blurred the lines of who is an employee and who is an independent contractor, often resulting in situations where workers who feel entitled to unemployment benefits are unable to get them.
Remote work, ubiquitous internet activity, and platforms like Fiverr and Upwork make it easy for employers to find individuals qualified to perform specific tasks, fueling this new working paradigm. As a result, many employers are outsourcing work that in-house employees would previously have handled—sometimes resulting in unintentional employee-employer relationships.
Remember that employers are incentivized to classify workers as independent contractors, because it allows them to avoid withholding employee taxes, paying unemployment taxes, and paying workers’ compensation insurance. For this reason, never simply accept an employer’s classification of your employment relationship if you have any reason to believe that you are actually an employee.
How Do State Unemployment Agencies Determine Workers’ Classifications?
While every state manages its own unemployment system, state unemployment agencies commonly use the Internal Revenue Service’s 20-factor test that determines the level of control an employer exercises over a worker. The greater the level of control, the more likely that an employer should classify a worker as an employee rather than an independent contractor. The IRS’s factors include:
- Whether the worker is required to comply with instructions about where, when, or how to work
- Whether the employer provides training
- Integration of the worker’s services into business operations
- Whether the services performed are rendered personally
- Whether the employer hires, supervises, and pays assistants
- The duration of the relationship
- Set hours of work
- Full-time hours that prevent a worker from doing other work
- Where the work is performed
- Set order or sequence of work
- Whether workers are required to submit regular or written reports to the employer
- Payment schedule
- Payment of business or travel expenses
- Whether tools and/or materials are furnished by the employer
- Whether the worker or the employer has made a significant investment in the facilities used to accomplish the work
- Whether the worker is subject to a risk of an economic loss
- Whether the worker works for more than one firm at a time
- Whether the worker makes services available to the general public on a regular and consistent basis
- Whether the employer has the right to discharge a worker
- Whether the employee has the right to terminate the relationship without incurring liability
No one factor or group of factors is conclusive, and some factors may weigh more heavily in certain industries or contexts.
Call an Unemployment Lawyer Today to Schedule a Free Case Evaluation
If you believe that your employer has misclassified you as an independent contractor when you actually served as an employee, and that you were wrongfully denied unemployment benefits, speak to an attorney as soon as you can. Attorney Kenneth P. Carp is dedicated to helping employees obtain the benefits to which they are entitled under the law as quickly and efficiently as possible. To schedule a free consultation with Mr. Carp, call our office today at (636) 947-3600 or send us an email through our online contact form.