What Happens if You Are Misclassified as an Independent Contractor?

 Posted on March 15, 2026 in Employment Law

Being labeled an independent contractor when you're really an employee can cost you far more than you might realize. Under employment law, you may be entitled to overtime pay, health benefits, workers' compensation, and other protections that independent contractors don't receive.

The problem is more widespread than most people know. According to a study commissioned by the U.S. Department of Labor, up to 30 percent of audited firms had employees misclassified as independent contractors. If you think this has happened to you in 2026, a Howard County, MD employment lawyer can help you understand your rights and what you may be owed.

What Is Worker Misclassification?

Worker misclassification happens when a company labels you as an independent contractor instead of an employee, even though the nature of your work relationship makes you an employee under the law.

You can be considered an employee even if a company says otherwise. The label a company puts on you doesn't determine your legal status. What matters is the actual reality of your working relationship.

How Do You Know if You Were Misclassified by Your Employer?

There is no single test that applies in every situation, but federal law looks at the economic reality of your relationship with the company. Under the Fair Labor Standards Act, the Department of Labor examines factors like how much control the company has over how you do your work, whether the work you do is central to the company's business, and how permanent or ongoing the relationship is.

If your employer sets your schedule, provides your tools, directs how you do your work, and the relationship is ongoing rather than project-based, there's a good chance you may actually be an employee under the law, regardless of what your contract says.

What Benefits and Protections Do Misclassified Workers Lose?

As an employee, you are entitled to protections and benefits that independent contractors don't receive. When you're misclassified, you may be losing:

• Overtime pay under the Fair Labor Standards Act, 29 U.S.C. § 207

• Minimum wage protections

• Employer contributions to Social Security and Medicare taxes

• Workers' compensation coverage if you're injured on the job

• Unemployment insurance if you lose your position

• Access to employer-sponsored health insurance, retirement plans, and other benefits

• Protections under the Family and Medical Leave Act

Over time, these losses add up significantly. Many misclassified workers don't realize how much they've lost until they look closely at what employees in the same role are receiving.

What Can You Do if You Have Been Misclassified in Maryland?

Maryland has its own worker protection laws that work alongside federal law. Under the Maryland Wage and Hour Law, Md. Code, Lab. & Empl. §3–413 and § 3-415, employees are entitled to minimum wage and overtime pay. Maryland also has the Maryland Wage Payment and Collection Law, Md. Code, Lab. & Empl. § 3-501, which governs how wages must be paid and allows employees to recover unpaid wages.

If you've been misclassified, you may have a claim for back wages, unpaid overtime, and other damages. The time limits for bringing these claims vary depending on the law involved, so it's important not to wait.

Can Your Employer Retaliate Against You for Raising a Misclassification Claim?

Retaliation against a worker for reporting misclassification or filing a wage claim is illegal under both federal and Maryland law. If your employer cuts your hours, terminates you, or treats you differently after you raise a concern about your classification, that retaliation may give rise to an additional legal claim on top of the original misclassification issue.

Knowing your rights in this area matters. Many workers don't speak up because they fear losing their work entirely. An attorney can help you understand your options and what protections are in place for you.

Contact a Columbia, MD Employment Law Attorney Today

If you think you've been misclassified as an independent contractor, you don't have to figure this out on your own. Our Howard County, MD employment lawyer represents clients in both federal and state courts and takes a hands-on approach to every case. From the first call to the final resolution, you'll have direct access to an attorney who is supportive when you need guidance and aggressive when your rights need to be defended. Contact Freedman Law, LLC today and call 410-290-6232 to schedule a consultation. We are available 24/7.