Worker classification has become one of the fastest-growing sources of employment litigation. Employers often believe classification issues only arise in gig economy businesses, but traditional companies are increasingly pulled into misclassification disputes.
The legal analysis focuses less on job titles and more on control. Courts and regulators examine who controls the work, the schedule, the tools, and the method of performance. If a worker is economically dependent on the business and subject to its direction, calling them an independent contractor does not make it so.
Remote work has intensified the issue. Employers may assume that physical distance supports contractor status, but remote work does not eliminate control. Required hours, mandatory meetings, performance metrics, and exclusive service relationships all point toward employee classification.
Misclassification claims often arise indirectly. A single wage complaint, workers’ compensation claim, or unemployment filing can trigger a broader audit. Once misclassification is alleged, employers may face claims for unpaid overtime, benefits, taxes, penalties, and attorneys’ fees.
Intent rarely matters. Even good-faith mistakes can result in significant liability. Employers are often surprised to learn that signed contractor agreements carry limited weight if the working relationship contradicts the contract language.
Preventing misclassification issues requires more than proper paperwork. Employers must regularly review how contractors are actually used in day-to-day operations. Changes in job duties, supervision, or workload can shift classification risk over time.
Early legal review allows employers to restructure relationships before disputes arise. Once a claim is filed, options narrow quickly and costs rise just as fast.
