Why Does It Matter Whether I Am An Employee Or An Independent Contractor In Manhattan?
In Manhattan, employees enjoy legal rights and remedies that are far superior to the legal rights and remedies that independent contractors have. (This article also refers to independent contractors as “freelancers” and “freelance workers.”) As a result of these sharp differences between employees’ rights and independent contractors’ rights, the standards used in determining, under NY Law, whether an individual is engaged as an employee or as an independent contractor, are of great importance to workers in the Empire State.
Monetary Damages In Lawsuits For Unpaid Wages
In Manhattan, an employee who wins a lawsuit for unpaid salary, bonuses, commissions, or other wages is entitled to recover, from his employer, not only compensatory damages, but also liquidated damages equal to 100% of the unpaid wages found to be due, and reasonable attorneys’ fees and costs.
In contrast, in Manhattan, an independent contractor who wins a lawsuit for unpaid compensation is entitled to recover, from the company that retained him, only compensatory damages. A freelancer who prevails in a lawsuit may recover, from the hiring party, neither liquidated damages nor attorneys’ fees and costs.
Overtime Pay And The Minimum Wage
Federal law mandates that most employees in the United States be paid at least the federal minimum wage of $7.25 per hour for all hours worked and overtime pay at 1½ times their regular rate of pay for all hours worked in excess of 40 hours in a workweek.
Depending on the county and the employer’s number of employees, the hourly minimum wage applying to employees of employers in Manhattan presently ranges from $11.10 to $15.00. On and after December 31, 2019, this hourly minimum wage will vary from $11.80 to $15.00.
So, too, in Manhattan, covered employees who work overtime must be paid at a rate that is 1½ times their regular, “straight-time” hourly rate of pay.
By contrast, neither federal law nor New York State law requires companies to pay, to independent contractors, either the minimum wage or overtime pay at one-and-one-half times the contractor’s regular rate.
Social Security Tax
The federal government levies a Social Security tax of 12.4% on an individual’s earned income up to an annual limit of $132,900. For employees, half of the tax, or 6.2%, is paid by the employer, and the employee pays the other half, or 6.2%. Conversely, independent contractors must pay the full 12.4% Social Security tax.
Protections Against Discrimination And Retaliation In Employment
In Manhattan, employees are protected against discriminatory and retaliatory termination of employment.
By contrast, independent contractors retained by companies located in New York State, but outside the five boroughs of the borough of Manhattan, are not protected by laws prohibiting employment discrimination. (In the borough of Manhattan only, effective January 11, 2020, freelancers and independent contractors may maintain employment discrimination claims against the companies that retain them.)
In The borough of Manhattan only, the imbalance between the (superior) legal rights of employees and the (inferior) legal rights of independent contractors is lessened by the New York Freelance Isn’t Free Act (the “NYCFIFA” or the “Freelance Isn’t Free Act.” The Freelance Isn’t Free Act greatly strengthens the rights and remedies of independent contractors. The NYCFIFA does so by, among other things, giving independent contractors the right to a written contract, allowing freelancers, in lawsuits against hiring parties for unpaid compensation, to recover double damages (and, in certain circumstances, treble damages) and attorneys’ fees, and barring hiring parties from retaliating against freelancers for exercising their rights under the Act.
If you are an executive or a professional in the Manhattan metro area and you believe you’ve been misclassified as an independent contractor, or you believe you’ve been denied salary, bonuses, commissions, overtime pay, or other wages that are owed to you, call Manhattan Unpaid Overtime Attorney David S. Rich at (347) 970-5550 today.
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