What to do if you do if you were an employee but called an independent contractor?

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What to do if you do if you were an employee but called an independent contractor?

My “employer” kept telling me they were going to make me an employee. I typed out and filled out my own job application and signed a W-2. I got the paperwork for them and registered myself as an employee with the state. They never made me an employee and now they say they are shutting down the business. My uncle told me that it is illegal to be an office manager sub-contractor and I don’t want this to affect me getting a new job. They seem all of a sudden that they are kind of shady and I don’t want them to screw me. What do I do now? I have not had any taxes taken out all year.

Asked on November 7, 2011 under Employment Labor Law, Ohio

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

It is not necessarily illegal to be an office manager as a contractor, but would have to be set up and run properly.

In terms of protecting yourself--file an estimated tax return and estimated tax payment. As long as the IRS gets the appropriate amount, you should be able to avoid personal liability for it not having been withheld by your employer. Speak with a tax preparer right away.

In terms of compensation to which you ay be entitled: if you should have been an employee (that is, you did not have the necessary "independence" to be an independent contractor; go to the Dept. of Labor website to see the standards for when someone is--and is not--an independent contractor), then the employer may owe you compensation: e.g. for the employer share of FICA, for any benefits you should have received as their employee, possibly for overtime, etc. Of course, if the are out or going out of business, it may be impossible to collect, but it would be worthwhile for you to consult with an employment law attorney about the situation.


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