Understanding Employee Misclassification Lawsuits: Protecting Your Workplace Rights
Countless workers across the country perform their jobs under incorrect employment classifications, often without realizing they’re being denied fundamental workplace protections and compensation. This widespread practice of labeling employees as independent contractors represents more than administrative error—it constitutes a violation of labor laws that can cost workers thousands of dollars in lost benefits and protections.
The Financial Impact of Misclassification
When employers incorrectly designate workers as contractors rather than employees, the financial consequences extend far beyond a simple title difference. Workers lose access to overtime compensation, employer-provided health insurance, retirement plan contributions, paid leave, unemployment insurance protection, and workers’ compensation coverage. Additionally, misclassified workers often bear the full burden of payroll taxes that employers should rightfully pay half of.
The cumulative effect over months or years can be substantial. Consider a worker consistently logging fifty-hour weeks but receiving straight pay because they’re classified as a contractor. That individual loses ten hours of time-and-a-half compensation weekly—potentially tens of thousands of dollars annually. When employers classify multiple workers incorrectly, the aggregate financial harm to the workforce can reach into the millions.
The Internal Revenue Service (IRS) estimates that American employers intentionally misclassify millions of workers as independent contractors to reduce labor costs and avoid paying state and federal taxes.
Employee misclassification allows large corporations to save on the bottom line, but at the expense of workers. Misclassified employees lose workplace protections, including the right to join a union, face an increased tax burden, receive no overtime pay, and are often ineligible for unemployment insurance and disability compensation.
Joe Lyon is a highly-rated lawyer representing plaintiffs nationwide in a wide variety of labor disputes and employee misclassification lawsuits.
Employee Misclassification Lawsuits
An independent contractor provides a good or service to another individual or business, often under the terms of a contract that dictates the work outcome, but the contractor retains control over how they provide the good or service.
The independent contractor is not subject to the employer’s control or guidance except as designated in a mutually binding agreement. Essentially, independent contractors treat their employers more like customers or clients, often have multiple clients, and are self-employed.
A worker’s status is generally determined by whether the individual is economically dependent on the business he or she is working for, or is actually in a business for themselves. Some basic questions can be asked to make a determination about employment status:
- Does the company control what a worker does or how a worker performs duties?
- Are financial aspects of the work, such method of payment and reimbursement of expenses, controlled by the worker or the company?
- Is there a written contract?
- Does the worker receive employee-type benefits, such as a pension plan, insurance, or vacation pay?
Why Do Employers Misclassify Workers?
There are several reasons an employer might consider misclassifying workers, the most pertinent of which are outlined below:
- Misclassifying employees as independent contractors can free employers from providing a minimum wage, and abiding by hour laws.
- Tax savings: Employers are not required to pay Social Security and unemployment insurance (UI) taxes for independent contractors. These tax savings, as well as savings from income and Medicare taxes can save employers between 20 to 40 percent on labor costs.
- Employers may avoid laws enforced by the Equal Employment Opportunity Commission (EEOC).
- Employers can avoid union organization. Independent contractors are not covered by the National Labor Relations Act.
- Employers save money on company provided benefits as independent contractors are usually not permitted to enroll in employer-based health and pension plans.
- Employers may avoid having to verify that workers are U.S. citizens or covered by a work visa, and exploit low-wage immigrant workers with few legal repercussions.
Legal Standards and Classification Tests
Employment law utilizes specific criteria to distinguish genuine independent contractors from employees. Courts examine the degree of control employers exercise over work performance, whether workers use their own equipment, the permanence of the working relationship, and whether the work performed is integral to the employer’s core business operations. The economic reality test also considers whether workers have genuine entrepreneurial opportunities or function essentially as employees despite their contractual designation.
Many employers deliberately misclassify workers to avoid legal obligations and reduce labor costs. Others may misclassify workers through misunderstanding of legal requirements. Regardless of intent, the harm to workers remains the same, and legal remedies exist to address these violations and recover what workers have rightfully earned.
ABOUT THE LYON FIRM
Joseph Lyon has 17 years of experience representing individuals in complex litigation matters. He has represented individuals in every state against many of the largest companies in the world.
The Firm focuses on single-event civil cases and class actions involving corporate neglect & fraud, toxic exposure, product defects & recalls, medical malpractice, and invasion of privacy.
NO COST UNLESS WE WIN
The Firm offers contingency fees, advancing all costs of the litigation, and accepting the full financial risk, allowing our clients full access to the legal system while reducing the financial stress while they focus on their healthcare and financial needs.
Your Legal Rights and Remedies
Workers who have been misclassified possess legal standing to pursue compensation through various channels. Claims can seek recovery of unpaid overtime wages, reimbursement for business expenses that should have been employer-paid, benefits value, tax burden shifts, and additional damages. Many employment laws include provisions for liquidated damages, effectively doubling the recovery of unpaid wages. Attorney fee provisions in these statutes mean prevailing workers typically have their legal costs covered by the employer.
Class action litigation provides powerful mechanisms when multiple workers face similar misclassification. These collective actions create efficiency, share litigation costs among plaintiffs, and often result in comprehensive policy changes that protect future workers. Both individual and class claims can yield substantial recoveries and correct ongoing unlawful practices.
Why Choose The Lyon Firm for Your Misclassification Case
Employment law claims require attorneys who understand both legal nuances and workplace realities. The Lyon Firm has successfully represented workers across industries, recovering significant compensation for misclassified individuals and worker groups. Our attorneys thoroughly investigate classification practices, calculate full damages including often-overlooked elements, and pursue maximum recovery through negotiation or litigation.
We handle misclassification cases on contingency, meaning you pay no attorney fees unless we win your case. This approach ensures access to experienced legal representation regardless of your financial situation. Our team manages all aspects of your claim while you continue focusing on your livelihood and family.
The Lyon Firm’s commitment to worker advocacy means we fight aggressively against corporate practices that shortchange hardworking people. If you suspect you’ve been misclassified as an independent contractor, contact us today for a confidential evaluation of your situation and potential claim. You deserve every dollar and protection the law provides.
