I’m going to give a quick review here for those of you that hit this page before you read this article about how to tell whether you’re being improperly classified.
If your salon owner has you classified as an “independent contractor” but has you working their hours, wearing a uniform, attending mandatory meetings/training sessions, has you on their payroll, and dictates to you how to do your job, you are very likely not an independent contractor. Here’s a link to the IRS website for more details on that.
What do you do if your salon owner misclassified you as an independent contractor?
First, read this post. Many salon owners make this mistake unintentionally. I recommend bringing your concerns to the salon owner before taking any further action. Once you’ve done your research and gathered your facts, schedule a meeting and present it to the salon owner. Let their reaction inform your decisions from there.
Then, file this form with the IRS. Filing this form will cause the IRS to launch an investigation into your employer’s business practices. If they determine that you were misclassified, the status of all other employees (past and present) will be evaluated. Should the IRS determine that the owner misclassified others, they will generally be fined and held required to pay all of that employment tax back.
Next, find a new job. This owner is probably going to fire you anyways for reporting them to the IRS. Even if they don’t, it’s unlikely that they’ll survive the audit.
“So what if I’m misclassified? What’s the big deal?”
The big deal is that you’re responsible for paying 15.3% of your total earnings at the end of the year in “self-employment” tax. If you have been being controlled as an employee, you weren’t self-employed, so you should only be paying half of that and having your employer contribute the other half.
You’re also not eligible to collect worker’s compensation or unemployment, since you’re not paying into it. You’re not entitled to the prevailing wage or overtime, which means the salon owner can schedule you to work a 65-hour week and send you home with little (or no) guaranteed base wages or overtime pay.
you’re getting shafted so the salon owner can evade taxes and their wage obligations to you.
They’re making those expenses your problem, all while leaving you without rights and protections every American employee is provided.
So, fill that form out and get what is yours. If you’re paying self-employment tax, you need to be enjoying the freedom that you are entitled to as a self-employed person. If you are you’re your own boss, you should be acting accordingly.