How much can you sue an employer for misclassification?
Millions of workers could be misclassified as independent contractors instead of employers. As many as 30% of employers misclassify their workers, according to the National Employment Law Project.
Why does that matter for workers? You might be missing out on overtime pay at time and a half for hours over 40 per week, health insurance, and unemployment benefits. And you might be overpaying your taxes.
You can recover damages by filing a 1099 misclassification lawsuit. But how much can you sue an employer for misclassification? Our FAQ will answer your questions.
Can I sue my employer for misclassification?
Yes, you can sue your employer for misclassification. Incorrectly classifying workers as independent contractors is against the law. And it costs you money.
As an independent contractor, you’re paying employer and employee Social Security and Medicare taxes. Plus, you might be missing out on benefits like health insurance, retirement plans, and more.
An independent contractor misclassification attorney can help you figure out how to file a 1099 misclassification lawsuit.
What are the damages in a 1099 misclassification lawsuit?
When employers misclassify workers, they owe penalties to the IRS and Department of Labor. Plus, they have to pay damages to the worker.
Your damages for misclassification can include:
- Unpaid wages, including unpaid minimum wage and overtime pay
- Compensation for unpaid benefits
- Reimbursement for overpaying on taxes
- Penalties for employment law violations
The amount your employer owes in damages depends on the specifics of your case.
How much can you sue an employer for misclassification?
During a 1099 misclassification lawsuit, courts determine how much your employer owes you for wrongly paying you as an independent contractor.
The amount you can sue for depends on various factors, including:
- How long you were misclassified
- Your wages or pay rate
- The specific violations involved
- Your state’s laws
Lawsuits can potentially recover tens of thousands of dollars or more, especially in cases involving multiple workers or long periods of misclassification. When it comes to unpaid overtime and unpaid minimum wage, you’ll receive double damages. That means twice the amount you were lawfully owed.
What are two things that can happen if there is a misclassification of a worker?
Here are two things that can happen because of 1099 misclassification:
- Legal action: Workers or government agencies may file lawsuits against the employer. This can result in the employer having to pay back wages, penalties, and legal fees, with double damages.
- Audits and fines: Government agencies like the IRS or Department of Labor may audit the company. This can lead to substantial fines and penalties for unpaid taxes and violations of labor laws.
The consequences depend on factors like the employer’s intent, the number of affected workers, and the duration of the misclassification.
For example, if you worked three years for 60 hours per week at a rate of $30 per hour, that’s around 3,000 hours of unpaid overtime. You’re owed an additional $15 per hour for those 3,000 hours, or $45,000. On top of that, damages are doubled as a penalty to the employer, so you’d get $90,000.
Some states, like New York, have an even longer statute of limitations. That means you can receive damages for up to six years of work.
If you believe you’ve been misclassified, it’s a good idea to consult with an independent contractor misclassification attorney for guidance on your specific situation.
How to Report 1099 Misclassification
Not sure how to report an employer for misclassification of employees? You can report 1099 misclassification to your state employment agency, the IRS, or the Department of Labor.
You can also contact a misclassification attorney to learn more about your legal rights and the damages you may be owed.
Read more about independent contractor protections or contact an employee misclassification lawyer to ask about your case.
Charles Joseph offers free, confidential consultations to victims of misclassification. Charles Joseph brings over two decades of experience as a hostile work environment attorney and founder of Joseph & Kirschenbaum. His firm has recovered over $140 million for clients.
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