Expert: Shirley McAllister, CPP, PHR - 4/1/2010

Question
Working at a job as a W-2'd salary employee. The employer is changing my status to a 1099 employee.  Still have to be there every day and have the same hours to work.  They are telling the employees that we cannot file for unemployment benefits, since they already changed us to 1099'd employees without our knowledge.  So,my question is...  does this constitute a lay-off? There have been no contracts signed, and as of my last check (last week), my status was the same, i.e. W-2.  They are being shady and wanting to avoid UE taxes and applications along with paying FICA etc...

Answer
What your employer is doing is illegal to the max!  Once you are an employee and classified as such you cannot just be changed to an independent contractor and do the same job. This is misclassification and the employer can be fined for it and he will have to go back and pay all the taxes he did not pay.

You need to immediately contact your local department of labor and let them know what is happening so they can put a stop to it.

Shirley