Thousands of workers across Indiana go to work every day, expecting fair pay for their time and benefits for themselves and their families. Unfortunately, for some of Indiana’s workforce, unethical employers find ways to avoid giving their employees the wages and benefits they deserve.
One of the most common ways is through misclassification. How does this happen, and how can employees protect themselves?
What is employee misclassification?
Misclassification happens when an employer improperly categorizes a worker, often as an independent contractor rather than an employee. This prevents workers from accessing essential benefits extended to regular employees, such as health insurance, retirement plans and paid time off.
They also lose protections provided under the Family Medical Leave Act, the Americans with Disabilities Act and the Age Discrimination in Employment Act. Misclassified workers are also not entitled to minimum wage protections or overtime pay. Additionally, misclassification creates a heavier tax burden on employees because they are considered contract workers. They must cover the employer and employee portions of their Social Security and Medicare taxes.
While employee misclassification mainly impacts workers, it can also affect federal, state and local governments. Unemployment insurance and workers’ compensation are two programs funded through payroll taxes.
Indiana recognizes the issues caused by employee misclassification and has taken measures to combat the practice. The Department of Labor has procedures to investigate and penalize businesses that violate the law. While misclassification can occur anywhere, it’s typically in industries where employees are generally lower paid, such as home health aides, nail salons, custodians and landscapers.
It’s essential for Indiana’s workforce to understand the laws in place to protect them. Furthermore, resources are available to help them get the benefits and protections they deserve.