The so called “gig economy,” where people work many different jobs to make a living, has provoked a debate about what to call these workers and how they should be paid. Are these workers independent contractors (self-employed) or are they employees of the company for which they work? Recently three drivers for Amazon sued saying they were owed overtime, back wages, and compensation for their car maintenance, fuel, and other expenses.
Independent Contractor or Employee?
Generally, a person is an independent contractor if the payer controls or directs the result of the work. The person is an employee if the payer can control what will be done and how it will be done. The IRS gives three categories of factors that give evidence as to how much control and independence a person providing services has.
- Behavioral – Does the payer have the right to control how and what the worker is doing?
- Financial – Does the payer control whether a worker is reimbursed for expenses, how he/she is paid, and other business aspects of the job?
- Type of Relationship – Does the worker receive benefits like vacation pay or pension plan? Are there written contracts?
All these factors come into play and will be different in each case. The factors relevant for one case may not apply to another. If a person is classified as an independent contractor and hired for their services, then they are responsible for paying the taxes on their wages. If a person is classified as an employee of a company then the company must withhold income tax and pay Social Security, Medicare, and unemployment taxes on the wages paid.
The drivers suing Amazon were part of a new smartphone app called Amazon Flex. The app allows drivers to make their own schedules by choosing their own shifts and scheduling pickups themselves. The app is already functioning in 30 different U.S. cities. The suit, filed in federal court in Seattle, alleges that the drivers should have been classified as employees rather than contractors, and charges that Amazon violated federal labor law when they misclassified employees.
Philadelphia Employment Lawyers at Sidney L. Gold & Associates, P.C. Protect Victims of Wage and Hour Violations in Pennsylvania
If you are not sure if you have been paid correctly, we can help you recover wages you are owed. At Sidney L. Gold & Associates, P.C., our Philadelphia employment lawyers have been fighting for the rights of employees for over 30 years. Call 215-569-1999 for a free consultation about your case, or contact us online.