Employee or Independent Contractor?

Some employers call workers “independent contractors” or pay them on a 1099 to avoid overtime, payroll taxes and workers’ comp. What you’re called doesn’t decide it. How the work actually happens does.

• Construction
• State-specific
• California
• Massachusetts
• New Jersey
• New York

Why it matters to you

Misclassified workers usually lose:

• Minimum wage and overtime protection
• Workers’ compensation if injured
• Unemployment benefits
• The employer’s share of Social Security and Medicare taxes (you pay both halves as “self-employment tax”)
• Protection under many anti-discrimination and leave laws

Signs you’re really an employee

• The company tells you when, where and how to work
• You’re paid by the hour or day, not by the job, and can’t make or lose money by managing the work
• The company supplies the tools, materials and equipment
• You work only or mostly for this one company, for a long time
• Your work is part of the company’s regular business (a framing company’s framers)
• You don’t have your own business, license, insurance or customers

Federal and state tests

• Federal wage law (FLSA) uses an “economic reality” test: are you economically dependent on the employer, or truly in business for yourself?
• ABC test states: some states presume you’re an employee unless the company proves (A) you’re free from its control, (B) the work is outside its usual business, and (C) you’re independently established in that trade. California (AB 5), Massachusetts and New Jersey use versions of this test for important laws, and others use it for unemployment insurance.
• Construction-specific laws: several states, including New York, have construction “fair play” laws that presume construction workers are employees.
• The IRS has its own test for taxes. You can ask the IRS to decide your status using Form SS-8.

Last updated: October 1, 2026