Page 5 - White Paper-Independent Contractor Laws

those damages are automatically tripled and the employer is required to pay not

only its own legal costs, but the employee’s as well.

Second, the measure of damages may be greater than you think. These can

include the value of benefits that W-2 employees receive, the amount of self-

employment tax liability the employee has incurred by being classified as a

contractor, the lost opportunity to collect unemployment benefits if terminated, and

any overtime pay that person would have been entitled to as a W-2 employee.

By way of example, imagine an independent contractor earning $50,000 per

year in a company where W-2 employees receive two weeks of vacation per year,

paid federal holidays, and an employer contribution to health insurance of $500 per

month. In this scenario, the contractor is terminated and unable to find another job

for three months. The damages that individual might claim are:

• $1923 for the two-week vacation benefit s/he did not receive

• $1923 for the ten paid federal holidays s/he did not receive

• $3500 for the 7% self-employment tax s/he incurred liability for

• $7,200 for the three months of unemployment (at the maximum benefit

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