To avoid the obligations that come with hiring employees, employers will sometimes use contracts to characterize workers as independent contractors. Although there’s nothing wrong with working with independent contractors per se, unscrupulous employers sometimes use this approach to deny rights to workers who are employees as a matter of law. Employee misclassification imposes serious costs on Nevada workers, especially those who are injured on the job.
Workers pay a high price for misclassification
Workers who are mischaracterized as independent contractors lose out on a wide range of important protections. In Nevada, most employers are required to provide their employees with various kinds of insurance coverage, including workers compensation, unemployment, and temporary disability insurance. Employers are also required to pay a portion of the employment taxes related to workers’ wages.
Unlike an employee, an independent contractor only gets the specific compensation bargained for in a contract. An independent contractor usually isn’t protected by an employer’s insurance policies. Instead, the contractor must carry his or her own insurance, including for work-related injury. An independent contractor also has to pay self-employment taxes, and isn’t protected by minimum wage laws.
The Nevada definition of independent contractor
Under Nevada law, NRS 608 et seq., workers in Nevada are treated as independent contractors, rather than employees, if they fall within one of three categories:
- The first category captures workers who have applied for a federal employer tax identification number or Social Security number, or has filed a federal income tax return for a business or earnings for self-employment, in the previous year.
- The second category applies to people working under a contract that requires them to hold a state or local business license and to maintain any necessary occupational license, insurance, or bonding for the term of the contract.
- The third category applies to workers who meet at least three of following criteria:
- The worker has control and discretion over the means and manner of performance of the work.
- The worker has control over the time the work is performed, unless agreed to in the contract.
- The worker is not required to work solely for one employer, unless required by law or agreed to in a written contract with a limited term.
- The worker is free to hire employees to assist with the work.
- The worker has invested in the worker’s own business by, for example, buying or leasing tools and equipment, obtaining necessary licenses, or leasing work space.
The important thing to remember about the definition of independent contractors in Nevada is that if an employee doesn’t fit within one of the criteria described above the employer can be on the hook for all the benefits that employees are entitled to as a matter of law.
How an employee can be misclassified as an independent contractor
As with many legal issues, knowing whether misclassification has happened requires a careful analysis of the facts. Employers will often try to misclassify employees by asking them to sign employment agreements that, at least on paper, check the necessary boxes to make the employee fit within the definition of independent contractor. Misclassification arises in such cases when the facts of the job don’t correspond to the wording of the contract. For example, the agreement may say that the worker is free to work for other clients, but in practice the manager might make clear that working elsewhere would result in the worker being fired.
Recover what’s yours
When an employer misclassifies employees to avoid a basic cost of doing business in Nevada, it hurts workers and their families, especially when workers are injured and denied the insurance coverage they deserve. At GGRM we work passionately to address this kind of injustice and get our clients the compensation they are owed. If you think you have been wrongfully misclassified and you would like to learn more about your legal options, reach out to us today for a free attorney consultation. We’re reachable at 702-388-4476, or through our contact page.