What rights does a temporary employee have?

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Question:

I'm a full-time college student, and I try to make a little money by doing temp work during school breaks. Over the Christmas holidays, I got a seasonal job at a retail clothing chain. But when I showed up for work, they told me I would be an independent contractor and would be paid on a 1099. When I agreed to take a job, I signed a temporary employment contract, agreeing that the job would last for only a month and I wouldn't be eligible for health insurance. Is a temporary employee the same thing as an independent contractor? 

Answer:

No, but a lot of employers make the same mistake yours has. 

An independent contractor is someone who has his or her own business, and usually provides services to a number of different hiring firms. Examples of true independent contractors include plumbers and other tradespeople, freelance writers, website designers, and landscape architects. What they have in common is that they offer a specialized service to the public, work (and get paid) by the job, and decide for themselves how, when, and where to do the work. They might work for several clients at once or for one client at a time, but independent contractors typically work on a project basis. Once the project they were hired to do is complete, they get paid and move on to the next gig. 

Workers who perform services that are an integral part of a company's operations -- such as your retail work at the clothing store -- are typically not independent contractors. Government agencies that have to determine whether a worker is an independent contractor or employee look at a number of factors to determine the economic reality of the relationship: Is the worker dependent on the hiring firm, or is the worker running an independent business? Does the worker decide how to do the job, subject to specifications laid down by the hiring company? Or is the worker subject to training, supervision, attendance requirements, and other rules that point to employee status? Generally, the more control a worker has over how to do the job, the more likely the worker is to be found an independent contractor.

A temporary worker may be an employee or an independent contractor. The length of employment doesn't determine your status. Instead, what's important is how much control the company exercises over you. It sounds like you will be doing the same work as the store's employees, only for a finite period of time. That makes you an employee, no matter what the store thinks. The store is free to limit the length of your employment and to preclude you from eligibility for benefits it voluntarily makes available to long-term employees, such as health insurance or paid vacation days. However, you are still considered an employee for legal and tax purposes.

If you're wondering what difference it makes, the answer is plenty. Start with that 1099: Although you'll get a larger paycheck, because the store won't withhold taxes, Social Security, or Medicare payments, that will come back to haunt you later. You'll still have to pay taxes, and you'll have to pay both your share and what would have been the employer's share of Social Security and Medicare (in the form of self-employment taxes). As an independent contractor, you won't be protected by workplace laws that prohibit discrimination, require payment of overtime, entitled you to workers' compensation, and so on. If the store agreed to keep you on during the school year, you wouldn't be eligible for unemployment if you were laid off. All of these benefits are available to employees, but not to independent contractors. 

Of course, you aren't really an independent contractor. However, if your employer claims you are a contractor, you'll have to win that fight before you can claim any employment-related benefits. For example, if you are hurt on the job and file for workers' compensation, the store will likely claim that you aren't entitled to benefits because you are a contractor. Then, you'll have to provide evidence that you are really an employee -- and win -- before you can move on to getting compensation for your injury. 

For more info on the differences between independent contractors and employees (temporary or not), see Nolo's article Independent Contractors vs. Employees.

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