Independent consultant vs FT employee

UPDATED: Sep 30, 2022

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Independent consultant vs FT employee

The comapny I work for was awarded a government
contract. While the contract is still in various approval
stages, they hired employees under the premise of
being ‘independent consultants’ for 90 days,
anticipating to have the contract approved and
implemented in that time frame. They have not and
are looking to extend it to another 90 days.

As consultants, we are required to be at the office,
from open to close 8 hours, use company materials
and resources computer, office space, phones, etc,
required to attend company training, etc. As
consultants we do not have benefits nor are taxes
taken from our checks.

By definition, am I not an ’employee’? In addition to
being underpaid the industry standard for my job, I’m
losing even more money because the entire tax
burden is on me. Company stated once the contract
is implemented and I am hired as an employee, my
time as a consultant will not be transferred/paid back
retroactively. I assume this is the same for taxes.

Is this company cheating us ‘consultants’ and the
IRS? What are my options? I could quit, but am in a
remote area where jobs are extremely scarce. I don’t
want to stop working for the company, as I do enjoy
what I do. I just feel as though I’m being cheated.

Asked on April 26, 2017 under Employment Labor Law, Alaska


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

You are correct: based upon the degree of control exercised over you by the company (e.g. their control over the hours and location of your work, their provision of and control over the tools, materials, or equipment you use, their presumed control over how you do the job, etc.), you should be classified as employees, not contractors. That means that your employer should be paying the employer share of tax withholding for you; should be giving you benefits (e.g. sick days, vacation, health insurance, etc.) if such are given to other employees at the company; and if you are not exempt from overtime based on your job duties/authority and how (and how much) you are paid, should pay overtime when you work more than 40 hours in a week. 
(Note: salaried employees can qualify for overtime, if they don't meet one or more of the tests or criteria for exemption. You can find those tests or criteria on the U.S Dept. of Labor website.)
You seem to be being cheated of compensation, based on what you write. You could contact the state or federal department(s) of labor to file a complaint, or possibly file a lawsuit for the taxes and other compensation you should have received.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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