Employee misclassification occurs when employers improperly categorize workers, such as classifying an employee as an independent contractor or classifying an overtime non-exempt employee as exempt. This allows employers to avoid responsibilities like paying for Workers’ Compensation insurance, health insurance, and other benefits required by federal employment laws. When left unaddressed, misclassification can undermine labor standards and create unfair competition among businesses.
Misclassified workers may not have sufficient workplace protections and may suffer from lost wages or benefits. When misclassification involves large numbers of workers, it can often lead to class or collective actions, allowing many workers to vindicate their rights together and effect positive change.