Navigating the Murky Waters of Contractor Status in New York

If you're reading this, there's a good chance you're traversing the vibrant but often complicated labor landscape of New York. Whether you work in a Manhattan high-rise, a Brooklyn co-working space, or a construction site, the status of your employment—specifically whether you're a contractor or an employee—has significant implications for your legal rights and financial well-being.

 

Why Does Classification Matter?

 

The difference between being an employee and a contractor isn't merely semantic; it impacts your tax liabilities, eligibility for benefits, and even your legal protections under labor laws. In New York State, misclassification can result in an array of penalties for employers, but what's often less discussed is how it affects you, the worker.

 

Tax Implications

 

As a contractor or a 1099 worker—named for the IRS form used to report your income—you are responsible for managing your tax obligations independently. Unlike traditional employees, contractors must take care of both the employee's and the employer's share of Social Security and Medicare taxes, often referred to as self-employment tax. The onus of quarterly filings and record-keeping falls squarely on your shoulders.

 

Access to Benefits

 

Benefits like 401(k) matches, paid time off, and disability benefits often remain beyond reach for contractors. The disparity extends to worker’s compensation and unemployment benefits, which are typically more readily accessible to traditional employees.

 

Legal Protections

 

New York State labor laws offer robust protections to employees, including safeguards against unlawful termination and harassment. These, however, usually don't extend to contractors. Contractors don’t enjoy the same rights as remedies afforded to employees in a wide variety of workplace situations—including discrimination, harassment, wage theft, whistleblower retaliation, and more. 

 

Navigating Reclassification

 

If you suspect that your employer has misclassified you as a contractor instead of an employee—often to skirt tax and benefit responsibilities—it is crucial to seek legal counsel. In New York, agencies like the Department of Labor take these issues seriously, but navigating these waters can be fraught with complexity.

 

The Freelance Isn’t Free Act

 

For those working in the five boroughs of New York City, recent legislation provides some relief for the stark disparity in legal protections between contractors and employees.  In 2017, the city enacted the Freelance Isn't Free Act (FIFA), a landmark legislation designed to protect freelance workers from non-payment and underpayment. FIFA stipulates that freelancers must be provided with a written contract for services exceeding $800, either as a single project or cumulatively over a 120-day period. This contract must specify the scope of work, rate, and payment terms. Employers are required to remit payment within 30 days of the completion of services or as agreed in the contract. Failure to comply can result in penalties, including damages and attorney's fees. FIFA also prohibits retaliation against freelancers who seek to exercise their rights under this law. Importantly, the legislation offers freelancers a pathway to recover money damages in court. While FIFA’s protections are not quite as comprehensive as those afforded to traditional employees, it still represents a significant step forward in safeguarding the rights of New York City’s sizable freelance workforce.

 

How We Can Help

 

Whether you wish to pursue a FIFA claim, you believe you’ve been misclassified, or you simply have questions about your status, T&S is here to assist you. With an intricate understanding of New York labor laws and a relentless commitment to advocating for workers, we can guide you through this convoluted landscape and help secure your rights.