Am I An Employee Or An Independent Contractor In Manhattan, NY?
Whether, at the end of the year, a company in New York State issues an I.R.S. Form W-2 or, instead, an I.R.S. Form 1099 to a worker likely signifies whether the company has classified the worker as an employee or, instead, as an independent contractor. (This article also refers to independent contractors as “freelancers” and “freelance workers.”) However, the business’s employment classification of the worker may well be wrong. The Manhattan courts give no deference to a company’s employment classification of its workers.
In some industries in New York State, companies commonly misclassify workers as independent contractors. That not only the business at issue but also all of that business’s competitors are misclassifying workers as freelancers rather than as employees is no defense to a worker’s wage-and-hour lawsuit against the business.
If you are, in fact, an employee of the company in Manhattan that retains you, then the company must classify you as an employee, even if there is widespread employment misclassification in the company’s industry. Misery loves company is not a principle of employment law.
In Manhattan, NY, employees enjoy legal rights that are far greater than the legal rights that independent contractors have. As a result of these sharp differences between employees’ rights and independent contractors’ rights, the standards used in determining, under New York law, whether an individual is engaged as an employee or as an independent contractor, are of great importance to workers in the Empire State.
To determine whether an employment relationship exists in New York State for purposes of overtime pay and the minimum wage, the courts use the economic reality test. The purpose of this test is to ascertain whether, as a matter of economic reality, the workers depend on someone else’s business for the opportunity to render service or are in business for themselves. In the former case, the workers are employees; in the latter case, the workers are independent contractors.
In applying the economic reality test to determine whether an employment relationship exists in Manhattan for overtime and minimum wage purposes, the court mainly considers five factors:
- The measure of control exercised by the employer over the worker. A high degree of control weighs in favor of finding the workers to be employees.
- The worker’s opportunity for profit or loss and their investment in the business. That the workers can lose money (because they buy equipment or incur expenses for which the company does not reimburse them) weighs in favor of finding the workers to be independent contractors. Likewise, independent contractors are more likely than employees to invest substantially in equipment that they use in working for someone else.
- The degree of skill and independent initiative required to do the work. That the workers are skilled or exercise business-like initiative weighs in favor of independent contractor status.
- The permanence or length of the working relationship. A long-term working relationship militates in favor of employee status.
- The extent to which the work is an integral part of the employer’s business. That the worker’s labor is an integral or key part of the employer’s business weighs in favor of employee status. For instance, suppose a law firm retains a plumber to patch up a leak in the firm’s offices. Plumbing is not an integral part of the employer’s business, so the plumber is likely an independent contractor.
If you are an executive or a professional in the Manhattan, NY area and believe you’ve been misclassified as an independent contractor, or you believe you’ve been denied a salary, bonuses, commissions, overtime pay, or other wages that are owed to you, contact a qualified unpaid overtime lawyer like attorney David S. Rich at (347) 941-0760 today.
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