Challenging Worker Misclassification: Wilson's Story
According to the National Employment Law Project, every year a projected 580,000 Pennsylvania workers are misclassified by their employers. This means their employers say that they are independent contractors, when they are really employees. Misclassification has a huge impact on these workers since misclassified workers end up paying 15.3% of their wages in Social Security and Medicare tax, instead of the 7.6% regular employees are supposed to pay. Fortunately, Philadelphia Legal Assistance’s (PLA) Taxpayer Support Clinic assists misclassified workers in challenging their misclassification, ensuring that they do not pay more taxes than they should.
In February 2021, Wilson contacted PLA’s General Intake Hotline and explained that he was misclassified as an independent contractor in 2020 by his employer. He knew this because he received a Form 1099 instead of a W-2. On top of this, his employer also falsely reported paying Wilson over $18,000, even though Wilson was actually paid less than $5,000. He was connected with Omeed, an attorney in PLA’s Taxpayer Support Clinic who specializes in worker misclassification. Wilson worked with Omeed to file a Form SS-8 with the SS-8 Unit of the IRS in which they challenged Wilson’s misclassification.
After filing the Form SS-8, Wilson worked with Omeed to file his federal tax returns, ensuring that Wilson only paid the uncollected employee share of Social Security and Medicare taxes. Additionally, Omeed assisted Wilson in filing a disclosure form with his 2020 return, explaining why he was reporting a smaller amount of income than what was reported on the Form 1099. However, Wilson had yet to receive his stimulus payments from last year and he had tax withholdings from a W-2 from a different job, so the IRS actually owed him payments. These payments were used to offset the amount he owed in Social Security and Medicare taxes, which meant Wilson claimed a tax refund of nearly $3,000! Plus, he received his refund within two weeks of filing.
Wilson knew that he had been misclassified. By acting on that knowledge and challenging his misclassification with assistance from PLA, he significantly increased his tax refund and filed the proper forms with the IRS to ensure that he did not have to pay taxes that he did not owe. At PLA, we are proud to support workers like Wilson in defending their legal rights.
If you think you may be a misclassified worker and need help challenging your misclassification, contact PLA’s General Intake Hotline at (215) 981-3800, Monday-Thursday, 9:30am to 12pm. You can also challenge your misclassification yourself by filling out a Form SS-8 on myss8.org and submitting it to the IRS. Learn more about worker misclassification by reading our new online resource, created with help from the Center for Urban Pedagogy, “Reclaim Your Workers Rights”.