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Employees may be eligible for unemployment insurance benefits if they lose their job through no fault of their own. Independent contractors are not eligible for those benefits.
Worker misclassification occurs when an employer treats workers as independent contractors when they are employees under the law.
Under the unemployment insurance law, workers are presumed to be employees unless the employer can prove that the workers are independent contractors.
The unemployment insurance law has a test that determines whether workers are employees or independent contractors.
There is a test specifically for general private employers, also known as "for profit" businesses.
The test has two parts. There are several factors or conditions for each part. Both parts of the test must be satisfied before a worker will be considered an independent contractor under the law. If the worker meets the conditions of one part of the test but not the other, the worker is an employee.
The first part of the test involves the amount of direction and control the employer has over the workers. This includes the instructions, training, and reports required, and other factors.
The second part of the test determines if the worker has an independently established business. The conditions for this part include: advertising as a business, having an office or choosing where to perform the work, re-doing unsatisfactory work for no additional pay, and other conditions.
The two-part test for general private employers can be found at: Unemployment Insurance - Worker Classification. This web site provides a more detailed explanation of each of the conditions of the two-part test and includes other resources.
There are also independent contractor tests for not-for-profit employers, state and local government employers, Indian tribal government employers, logging employers, and trucking employers. These tests are applied less commonly than the test for general private employers. These tests can be found at: Unemployment Insurance - Worker Classification.
If you need help in deciding whether you are an employee or an independent contractor, please email your questions to: firstname.lastname@example.org, and Department staff will contact you.
If you suspect that you are misclassified as an independent contractor by your employer, contact us.