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Know your rights: employee vs. independent contractor

You are excited about getting a job—someone actually wants to hire you for something! You now have to fill out forms and return them to your new employer. So you do that. Your employer must give you the correct one for the position, right?

Don’t be so sure.

Those pages of paperwork should tell you exactly what your role in the company is going to be. But one important distinction is the difference between an employee and a contract worker (sometimes referred to as an independent contractor). These two job classifications may be unfamiliar to you.

What is the difference and why should you care? As an employee, you are working for someone or for a company, and you are entitled to certain benefits including but not limited to your employer paying a percentage of your Social Security and Medicare taxes (FICA) and paying for workman’s compensation in case you suffer an employment-related injury.

As a contract worker, you work for yourself, and are therefore responsible for all of your own employment taxes. When it comes time to pay taxes, you will owe more to the government as an independent contractor than you would have as an employee. In this circumstance, your ultimate take-home-pay for the same hourly wage would be less than if you were an employee.

Businesses are motivated to offer you a position as a contract worker rather than an employee because it saves them money. Being a contract worker is not necessarily bad, though; some people prefer to take on work clients independently, using their expertise and choosing their own hours and work location. That is fine, as long as the position’s role is that of a contractor.

Neither employers nor employees can simply decide to make someone a contract worker just because it suits them. In order to be a legitimate contract worker, you have to satisfy specific conditions and guidelines. See, for example, Contract Workers vs. Employees: What Businesses Should Know.

Not all businesses know the difference—or care. In December, I secured a part-time job at Lynx, a tech-staffing firm in Waltham. I found the position through B.hired. Its job description was for an “entry-level researcher” for which training would be provided.

After an interview and a test that showcased my resume analysis skills, I was offered a job. Lynx’s representative and I had both signed the Offer Letter of Employment. Salary, schedule and even some anticipated time off was all agreed to. I thought that I was all set to commence work on Jan. 13 of this year.

Over winter break, I received the paperwork. Lynx wanted me to fill out a W-9, which is used for individuals working as freelancers or independent contractors, rather than the more commonly used W-2 for employees.

Lynx had previously told me that they wanted to train me to work in their office and that I would be working set times at their Moody Street location during their hours of operation. I asked my contact at Lynx about my classification as an independent contractor, because those factors tend to apply to employees, not independent contractors. I wrote to her in an email:

“Independent contractors are self-employed, which means they choose where and how they work. In contrast, employees are expected to go to a place of work and do their work at a time and place determined by their employer. I was just wondering if you could help me understand my position as an independent contractor, because I know that you and [your boss] want me to come in to work (as opposed to working from home and choosing my own hours).”

My contact responded with a phone call. I did not argue one way or another; I just wanted to be sure that my job classification actually reflected the true nature of my work for the company. She thanked me for bringing up these questions, and assured me that she would speak to her boss and get back to me in a few days.

On New Year’s Eve, I received an email from the company rescinding the offer. I asked for a reason why, and Lynx would not give me one.

The reason I am writing this is because I want to alert my fellow students and soon-to-be graduates of what unscrupulous employers can do to you before you actually start to work: Lynx’s decision to rescind their offer was, in my view, directly related to the totally legitimate questions I raised about my employment status.

We are all going to get jobs, be it part-time or full-time, and it is very important that we not let companies take advantage of our inexperience in the professional world. In this modern economy, contract workers have become and will continue to become a more significant part of the workforce.

I contacted both the Massachusetts Attorney General’s office and the Joint Task Force on the Underground Economy and Employee Misclassification funded through the Commonwealth of Massachusetts. Both offices told me that because I had not started working, the company had not broken any laws by rescinding the offer (even if they had signed, and I had accepted, an Offer of Employment).

When Lynx had responded to me by rescinding their offer, I wondered if something else entirely was going on. Did they know what they were intending to do was illegal, and they were just hoping that as a naïve college student I wouldn’t know the difference between employee and contract worker? Maybe so. But I hope now they know better.

And I also wonder whether, when I asked about my job classification, they then began to realize that I knew that their taking me on as a contract worker would violate Massachusetts’ and the IRS’ employment regulations? And that once I started working I could call them out and they would then be in serious trouble? Maybe. But, regardless, I hope that now you will know the difference and will work to end these questionable employment practices.

A good place to start is by letting your elected representatives and even the Attorney General’s office know that Massachusetts should serve notice on companies engaging in such practices that they will be scrutinized and held accountable. It is in the public’s interest that companies attempting to protect their own bottom lines not even think about violating employment and tax laws.

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