What to Do If You Are Misclassified as an Independent Contractor

Being labeled a contractor can mean paying both halves of payroll taxes and losing overtime, unemployment and workers' comp protection. The label on your contract does not decide your status; the reality of the relationship does.

How status is decided

Different laws use different tests:

• Wage and hour law (FLSA): an "economic reality" test asks whether you are economically dependent on the employer or in business for yourself. Factors include the employer's control, your opportunity for profit or loss, your investment, permanence, skill and initiative, and whether the work is integral to the business (DOL). In 2026, the Department of Labor proposed replacing its 2024 rule with a test focused on two core factors, control and opportunity for profit or loss; check the current rule (Dechert).
• Taxes (IRS): behavioral control, financial control, and the relationship of the parties.
• State law: some states, such as California and Massachusetts, use a stricter "ABC test" for certain purposes, which presumes employee status unless the business proves otherwise.

Signs you may be misclassified

• The company sets your schedule and supervises how you work
• You work only or mainly for one company, long-term
• The company provides tools, equipment and training
• You cannot set your prices or hire helpers
• Your work is the core of the company's business

Options

1. Wage claim: file with the DOL Wage and Hour Division or your state labor agency for unpaid minimum wage or overtime.
2. IRS Form SS-8: ask the IRS to determine your status. If you were an employee, you may use Form 8919 to pay only the employee share of Social Security and Medicare taxes (IRS).
3. Unemployment and workers' comp: apply anyway; the state agency will decide your status.
4. Lawsuit: individual or class claims for back pay, liquidated damages and expenses.

What you may recover

Unpaid overtime and minimum wages, liquidated damages under the FLSA, reimbursement of business expenses in some states, and penalties under state law.

Retaliation

Retaliation for asserting wage rights is illegal; see retaliation at work.

An employment lawyer can review your contract and day-to-day work to assess your status.

Sources

1. U.S. Department of Labor: Employee or independent contractor classification under the FLSA
2. IRS: Form SS-8, Determination of worker status
3. IRS: Form 8919, Uncollected Social Security and Medicare tax on wages
4. Dechert: DOL proposes independent contractor and joint employment rules (2026)