Employees and independent contractors can often do the exact same job. Still, there’s one small difference that can be the difference between thousands of dollars in benefits: the classification. Whether you are named an employee or contractor can change everything, even when you’re misclassified as a mistake.

What is the difference between employees and contractors?

The main difference between independent contractors and employees is their relationship to the work. An independent contractor has more independence when it comes to the work they are doing and their rates. An employee, however, functions more under their employer’s opinions and decisions.

However, employees also have more protection under federal and state regulations. While contractors have protection under basic labor standards (minimum wage, overtime, etc.), they also do not have worker’s compensation and unemployment insurance, and they must pay federal and state payroll taxes.

What is misclassification?

Because of these large disparities in how a contractor is protected and their benefits, misclassification can have a huge impact. Worker misclassification can mean that your employer has classified you as an independent contractor or exempt from proper overtime wages when you should not be classified as such. This “mistake” can cost you thousands in pay, benefits, protections and responsibility.

What do I do if I’m misclassified?

If your employer misclassifies you, you can experience huge losses. When you are hired as and function in your job as an employee, your employer should take responsibility for you and your work. However, if they misclassify you as an independent contractor, you may have to pay taxes that your employer should pay or lose benefits and wages in other areas.

Don’t accept a misclassification. If your employer classifies you as an independent contractor or as exempt when you should not be, talk to an attorney to fight for the benefits and wages that are owed to you.