Despite the warning signs that I had no forms to fill out when I started my job, I later realized that I was being misclassified as an independent contractor—as opposed to an employee—by my boss. That was three years ago. I've had no social security, FICA, sick or vacation days since then. I know the IRS now has the SS-8 form to address these issues, but I'm uneasy about filling it out behind his back. Should I just ask to be treated as an employee? Or file the form and move on? Thanks!
I’m a little confused because it’s not clear how long after you started you realized you were “misclassified.” Surely you must have noticed that you weren’t offered benefits and that your paycheck had no deductions? So I’m wondering why you didn’t discuss this with your boss as soon as you realized there had been a mistake. As I understand it (but an accountant will weigh in) an SS-8 is used to determine whether you are an employee or an independent contractor—but you’ve presented the facts. In your case, it’s not ambiguous: Right now and for three years you have been an independent contractor.
Full-Time vs. Independent Status
So now the issue is whether you want to be a full-time employee with benefits and the attendant tax liabilities, and whether or not your boss is prepared to take you on as a full-time employee. There are pros and cons to each situation. One issue to keep in mind: If you are making any major purchases or considering a mortgage, be aware that being an independent contractor (even with regular work and income) will certainly be looked at less favorably than if you have the security of full-time employment. On the other hand, depending on your arrangement, independent status can give you just that: a high degree of independence freeing you from some of the daily restrictions imposed on regular employees.
Clarify Your Position Upon Employment
I can only offer this advice to others out there: Be sure to clarify your employment status and exact title when you are offered a job! You need to have, in writing if possible, an offer including salary, benefits, title, and review schedule, among other crucial pieces of information. Not all jobs require you to sign a contract—if one is offered, be sure to review it with experts; if one is not, then you should initiate the process of asking for a letter of agreement or memorandum of understanding between you and the employer spelling all these details out. Don’t leave anything to memory or verbal agreement. You’ve got to protect yourself the way the employer will surely be protecting his own interests.
Tell us in the comments: If you didn't have a contract, how did you clarify your position at your last job?