At work, are you called an “independent contractor”? Do you get a 1099 instead of a W-2 at the end of the year? If so, your employer may have misclassified you, and that could have serious consequences.
Why Does It Matter?
If you’re classified as an independent contractor and paid as a 1099 worker, you’re responsible for paying your own income, Social Security, and Medicare taxes. You also don’t have access to the rights and protections that employees are entitled to under federal and state labor laws.
On the other hand, if you’re legally considered an employee, your employer must withhold taxes on your behalf and comply with a wide range of employment laws. For example, employees are often eligible for unemployment benefits, overtime pay, paid sick leave, and other protections. In Illinois, employees are entitled to paid time off under certain circumstances.
So, How Do You Know if You’re an Employee?
Multiple government agencies decide whether a worker is an employee or an independent contractor, and each uses a slightly different legal test. But the most important factor across all of them is control, specifically, how much control the business has over your work.
The IRS Test
The IRS is primarily concerned with tax compliance. It looks at:
- Whether the company controls how you do your job, not just what the job is;
- Whether the company has the right to fire you;
- Whether the company provides tools and a place to work (though this isn’t always a decisive factor).
The U.S. Department of Labor Test
The Department of Labor focuses on whether you are economically dependent on the company. It considers:
- Control: Does the company set your schedule, assign duties, or discipline you?
- Opportunity for profit or loss: Do you bid on jobs and manage your own earnings?
- Skill and initiative: Do you bring specialized skills or get trained by the company?
- Permanence: Is the job long-term or open-ended?
- Investment: Do you use your own equipment or materials?
- Integral part of the business: Is your work central to the company’s core operations?
The Illinois Department of Labor Test – The “ABC” Test
Illinois uses a stricter standard, assuming you are an employee unless your employer can prove all three of the following:
A. You are free from control or direction while performing your work.
Example: You’re hired to install an HVAC unit, and no one supervises your work directly.
B. The work you do is outside the usual course of the company’s business.
Example: You’re an electrician hired by an accounting firm to rewire their office.
C. You are engaged in an independently established trade or business.
Example: You regularly work as a licensed plumber for a variety of clients.
What Can You Do to Protect Yourself?
If you think your employer may have misclassified you, that could mean higher taxes for you and fewer legal rights. To assess your situation, ask yourself:
- Did I get a 1099 instead of a W-2?
- Did I sign an agreement calling me an “independent contractor”?
- Does the company control how I work or require me to follow internal policies?
If you answered yes to any of these, it’s worth speaking with an attorney. Misclassification can cost you thousands in taxes and lost benefits, and your employer may be violating state or federal labor laws.
What should you do if you think you are being misclassified?
- Keep Thorough Records
- Report Your Concerns Internally
- Seek Legal Advice
If your concerns are ignored or if you think your employer is not following the law, contact the Law Firm of 1818.
We’re Here to Help
At 1818, we’re dedicated to protecting employees from unlawful labor practices—including wage theft, forced overtime, retaliation, and misclassification.
If you’re being discriminated against, denied proper breaks, unpaid for overtime, or forced to cover the cost of work gear, contact the Law Firm of 1818 today. We’ll fight to ensure your rights are protected, your time is valued, and your employer is held accountable.
