Georgia is home to a diverse and growing workforce, with millions of people employed across a range of industries and sectors. From small businesses to large corporations, employers in Georgia rely on a mix of employees and independent contractors to get the job done.
While the state has a strong tradition of supporting business growth and development, it’s also committed to ensuring that workers are protected on the job, which is why most Georgia employers with 3 or more workers (including part-time) are required to carry workers’ compensation insurance.
Unfortunately, some employers intentionally misclassify their employees as independent contractors to avoid paying them benefits after a work-related accident or injury. In these cases, employers may be liable for a number of punishments and penalties.
Teen worker falls from a roof, but larger problems are discovered
One such case occurred in 2022 when a teenager doing roofing work for a Georgia contractor fell while on the job, suffering injuries.
Fortunately, the worker, who was only 17 at the time of the accident, only sustained minor injuries, but his accident uncovered bigger issues. Not only did the company fail to pay multiple employees their full wages, but it also violated child labor laws.
The teen should never have been performing such risky work when he fell 24 feet from the roof of a Lowe’s store. This is because the United States Department of Labor prohibits teen employees under 18 from doing roofing work or any other work considered hazardous that could increase the likelihood of a workplace injury.
Additionally, the Department of Labor’s Wage and Hour Division discovered that the contractor, JVS Roofing, was guilty of misclassification of its workers as independent contractors. This was done to cheat the workers out of approximately $3,000 in pay.
The company was fined $6,000 for violating child labor laws. The Department of Labor also recovered over $92,000 in back pay for the workers who were cheated out of their rightful wages. Penalties were also imposed on the company for safety violations.
What factors affect whether a worker is defined as an employee or an independent contractor?
Due to the rise of the gig economy in recent years, more workers are choosing to be independent contractors, but it’s not always obvious how a worker is classified. There are certain factors that determine whether a worker is defined as an employee or an independent contractor:
- Employees. An employee is a worker who is officially on a company’s payroll. They can be a regular full- or part-time worker who receives benefits and has taxes deducted from their paycheck.
- Independent contractors. An independent contractor is a self-employed individual or a company that provides goods or services to a client or multiple clients under a contract or agreement. Unlike employees, independent contractors work on a project or assignment basis and have more control over the work they do and how they do it. They are responsible for their own taxes, benefits, and expenses and generally have more flexibility in their work schedules.
Furthermore, independent contractors don’t qualify for the same protections afforded to employees per the Fair Labor Standards Act.
What are some consequences for workers if they’re wrongly classified as independent contractors?
Employers are prohibited from misclassifying employees as independent contractors. Usually, when this is done, it’s for fraudulent purposes to save money on benefits or wages. If a regular employee is wrongfully classified as an independent contractor, it can carry the following consequences:
- The worker would have to pay their taxes out-of-pocket.
- The worker would be ineligible for Georgia unemployment benefits if the employer terminates or lays them off.
- The worker would have no protections from labor laws, such as sick time pay, overtime or minimum wage.
- The worker would be ineligible for employer healthcare benefits.
What consequences can employers face for misclassifying their workers as contract workers?
Employers can also face certain consequences for deliberately misclassifying employees as contract workers, such as having to pay their workers the money they owe them in back pay. Workers can also file lawsuits against an employer for not receiving the benefits they were due as regular employees.
Additionally, employers can be issued penalties for the following:
- Failing to withhold federal and state taxes as well as Social Security and Medicare taxes for misclassified workers
- Failing to pay state unemployment insurance for misclassified workers
- Failing to purchase the required workers’ compensation for misclassified workers
- Failing to comply with the Family and Medical Leave Act (FMLA) when misclassifying workers
Additional penalties can be imposed on employers who repeatedly misclassify employees as independent contractors to save money.
Contact a Georgia workers’ compensation attorney
If you’re an employee in Georgia who suffered a job-related injury or illness, you’re entitled to workers’ compensation benefits to cover medical expenses and lost wages while you recover. If you believe your employer has deliberately misclassified you as an independent contractor to avoid paying you these benefits, you should contact a workers’ compensation attorney as soon as possible to protect your rights.
At Gerber & Holder Workers’ Compensation Attorneys, we believe all workers are entitled to a safe and supportive work environment. If you’ve suffered an on-the-job illness or injury in Atlanta, contact our experienced workers’ compensation attorneys for help with your claim.
Our attorneys have over 75 years of combined experience helping injured workers across Georgia recover the compensation they deserve.