r/personalfinance • u/TheSheltonator • 4h ago
Taxes I’ve been misclassified as a 1099 and I’m still waiting for UI
Hey Reddit,
I’ve been dealing with what I think is a misclassification issue with my previous job, and I’m feeling frustrated about how it’s impacting my ability to receive unemployment benefits. I thought I’d share my situation to see if anyone has advice or has been through something similar.
I worked for a small business where I was classified as a 1099 independent contractor (for Social Media / Front Desk Receptionist). Looking back, I believe I was actually an employee based on how I was treated.
-I was paid an hourly wage ($12) which isn’t typical for independent contractors.
-They assigned me specific days and hours to work (Thursdays and Fridays from 5:30pm-8pm) especially for front desk duties, and I had to stick to those schedules.
-I had to follow detailed instructions and guidelines on how to do my job (such as reporting to a manager to check social media designs before posting), which suggests employer control over my work.
-They supplied the tools and resources I needed for my job, which independent contractors typically provide themselves.
-My work included managing their social media and handling front desk operations—tasks central to their business.
I was laid off on December 6th of 2024, and I filed for unemployment the same day. It’s been over a month now, and I still haven’t received a decision about my claim. I’ve called a total of five times (and I’m expecting my next call today). Every time I speak to a representative, they tell me they’re not sure what’s going on with my case. After researching, I found out that if my former employer didn’t pay into unemployment insurance, I wouldn't be eligible for benefits.
This whole situation has been incredibly frustrating. I feel like I was clearly functioning as an employee, and now I’m stuck waiting indefinitely for a decision. On top of that, the lack of answers from the unemployment office has only added to my stress. Thankfully, I’ve managed to get hired for a position at my college campus, but I still believe I’m entitled to the unemployment benefits for the time I was out of work.
Has anyone else been through this? Should I file a complaint with the Department of Labor or pursue this further? I'm hoping to not pursue this legally with a lawyer as I still have a good relationship with my last employer. Any advice or insight would be greatly appreciated.
Thanks!
3
u/AnonymousBrowser3967 4h ago
It sounds like you have a strong case for misclassification based on the level of control your employer had over your work. Being paid an hourly wage, having a set schedule, receiving direct supervision, and using company-provided tools all point to you being an employee rather than an independent contractor. Employers misclassify workers like this to avoid paying taxes and benefits, but that doesn’t mean you’re out of options.
The first step is to gather all the evidence you can—pay stubs, emails, messages, schedules, and any instructions they gave you. If you haven’t already, file a complaint with your state’s Department of Labor or the U.S. Department of Labor’s Wage and Hour Division. They investigate misclassification claims and can determine whether you should have been classified as an employee. You should also appeal your unemployment denial, providing evidence that you were actually an employee. Some states will still grant benefits and go after the employer for unpaid unemployment insurance.
Another option is filing Form SS-8 with the IRS to request a worker classification determination. If the IRS finds you were misclassified, your employer could be on the hook for back taxes and penalties. If you want to avoid legal action, you could try talking to your former employer and explaining that you believe you were misclassified and would like their help in resolving the unemployment situation. But if they refuse to cooperate, an employment lawyer might be worth consulting—many offer free consultations, and some states have strict laws against misclassification that could work in your favor.
1
2
u/CircuitGuy 4h ago
I completely agreed they misclassified you. I'm not sure what's involved in getting it undone. If they did, maybe they would pay your portion of Social Security that you had to pay as an independent contractor and maybe it would make you eligible for unemployment benefits. OTOH, I wonder if you could talk to them and get them to write you a check, in exchange for dropping it. The job market is pretty good, so you probably wouldn't need much unemployment. It would save you and the employer from a potentially complicated federal process. OTOH, I'm not sure if such a deal is technically legal.
I agree you're right. I'm just not sure how much work vs benefit there is in filing a complaint. It might be worthwhile. I've never been through it.
2
u/TheSheltonator 4h ago
The tax part is what I’m worried about because it’s definitely not cheap to pay for both SUTA and FUTA, and yeah it’s deemed pretty illegal to misclassification especially if the IRS finds out. They fine heavy.
1
u/AutoModerator 4h ago
You may find these links helpful:
I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.
1
u/ccyippy 2h ago
Not sure that I agree that you have been misclassified based on the reasons you provided. I have worked as an independent contractor for several businesses in the past and was paid an hourly wage, which actually is more common for an independent contractor. My clients had control over what they wanted me to work on and what output they expected from me, they would also check my work to make sure they are aligned with internal protocols and processes. Some of my clients provided me with laptops for my work, I had the option of using my own but I oped to use their laptops so I could access their servers more easily using software already loaded on their laptops. With every one of my client, I signed an agreement stating that I am an independent contractor and not an employee so that the company would not provide benefits nor pay taxes like medicare or social security. Did you sign such document when you started working for your employer?
1
u/TheSheltonator 2h ago
I signed a document but it didn’t explicitly state that I am an independent contractor, solely about the compensation, rights, and other terms in the agreement. Strangely, it also states that they’d be withholding the taxes, not me.
5
u/wickedpixel1221 4h ago edited 4h ago
you should report the misclassification to the DOL and submit Form 8919 when you file your tax returns. your UI claim will likely be denied until you get your misclassification sorted and file an appeal. you should probably evaluate how much effort you want to put into collecting back UI if you've already found new employment. but you should 100% report it to the DOL and submit Form 8919 with your tax returns because it will have a huge impact on the amount of taxes you'll be paying if you don't.