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Is Technology Leading to More Misclassified Positions? Part 1

With the digital revolution in full swing, consumers can take advantage of prime retail deals delivered directly to their doorsteps, a chaperone standing by to escort them around town, and an excellent meal served straight to their kitchen table from any eatery in town. The only problem is that in any of these circumstances, the business model relies solely on independent contractors to provide this delivery service.

In this two-part article, a Tampa wage and hour attorney will discuss the employment impact of a growing trend in online ordering and delivery platforms. With the number of independent contractors reaching a staggering total in the United States, the companies that compensate these individuals are often flirting with a variety of potential wage and hour law violations. Remember, if your employer has failed to comply with wage and hour laws and you are owed additional compensation, consulting with one of our experienced Tampa wage and hour attorneys can help you reach a beneficial outcome.   

Independent Contractor Statistics

According to the National Bureau of Economic Research, independent contractor positions have increased by nearly 40 percent over a 10-year stretch from 2005 to 2015. Unfortunately, many of these “employment opportunities” violate federal wage and hour laws. In fact, depending on the state you reside in, anywhere from 10 to 20 percent of businesses located in the United States misclassify at least one employee in their workforce. If you work in housecleaning, in-home health care, trucking, retail, or the service industry, chances are that your job status is more prone to being misclassified than other industries.

How Employers Maximize Their Profit Margin        

If undetected, an employer can enjoy many benefits by misclassifying a worker’s job status. Here are the primary ways that an employer can maximize their bottom line by misclassifying their employees as independent contractors:

  • Zero Benefits: Employers can avoid paying high workers’ compensation premiums, payroll taxes, and health insurance when they hire independent contractors.
  • Unemployment: If the employee leaves their position, they are ineligible for short-term benefits like unemployment insurance.  
  • Wage Issues: Misclassified employees do not earn overtime pay and are susceptible to wage theft. Moreover, many independent contractors fail to earn minimum wage.

If a business is deliberately misclassifying their employees, this impacts more than just their workers. Without income taxes, this affects federal and state governments along with workers’ compensation, disability, and unemployment insurance services. In the end, these government systems lose revenue through the misclassification of positions.

For more information on how new technologies impact wage and hour laws, please read the second section.        

If you would like to speak with a Tampa wage and hour attorney, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.