The Kansas Department of Labor presents a guide to determine worker classification: employee or independent contractor.
Understanding Worker Classification
Worker misclassification occurs when an employer wrongly categorizes workers as independent contractors instead of employees. This presents various problems for workers, such as losing access to benefits like unemployment, workers’ compensation, social security, and tax withholding. It also puts businesses who follow the law at a competitive disadvantage against those who misclassify workers. Intentionally misclassifying workers is illegal and considered tax and insurance evasion.
The Consequences of Under the Table Payments
Another form of worker misclassification is paying cash “under the table.” This practice should be avoided, as it breaks the law and leads to not paying payroll-related taxes. Employers engaging in this practice may face significant penalties and fines from the Kansas Department of Labor and Kansas Department of Revenue.
Determining Employment Status
Employment is defined as services performed by an individual for wages under any contract of hire, unless it can be proven that the individual has been and will continue to be free from control or direction over their work. An employee is someone who performs services for an employer and is subject to the employer’s control over what will be done and how it will be done.
An independent contractor, on the other hand, has their own independent trade, business, or profession and offers services to the public. The key factor in determining classification is the right of control. If the business engaging the contractor does not control or direct the means and methods of accomplishing the objective, the individual is considered an independent contractor.
Identifying an Employer-Employee Relationship
An employer-employee relationship exists when the employer has the right to exercise control over the worker’s services, including how they are performed. The right to discharge a worker at will and without cause also indicates this relationship. A written contract claiming to establish an independent contractor relationship is not valid if the worker meets the criteria for being an employee.
In general, an employer-employee relationship is found when the work being done is an integral part of the employer’s regular business and the worker does not furnish an independent business or professional service to the employer.
Reporting Misclassification Concerns
If you believe you are being misclassified or suspect intentional misclassification to avoid tax payments or legal obligations, please report your concerns by visiting www.kdor.org or emailing firstname.lastname@example.org.
We hope this information helps you. For further questions, please visit www.kansasemployer.gov to review frequently asked questions. Thank you for reading, and remember, we are here to assist you throughout this process.