Worker misclassification is the practice, intended or unintended, of assigning the status of independent contractor to a worker who is in fact an employee according to the current legal standard. This type of misclassification potentially keeps the worker from receiving the statutory protections offered to employees (e.g., minimum wage, overtime), and also often prevents the worker from accessing employer provided benefits. Worker misclassification also affects competition between compliant and noncompliant employers, and it impacts the funding and administration of federal and state government programs.

Workers may not understand that the categorization of independent contractor status makes certain rights and benefits unavailable to them. To better document workers' understanding of issues related to job classification, Abt Associates, under contract to the DOL, designed a survey to collect information on workers' knowledge about their self-perceived current job classification and the rights and benefits associated with that classification. The survey was administered to 8,503 persons age 18 and older living in the United States who have a telephone and who had worked for pay or profit at any time in the 30 days before the interview. Additionally, semi-structured interviews were conducted with 17 employers and employer representatives.

Survey responses suggested a mixed understanding of employee rights and benefits and how they would change with a different classification. Though most employees correctly identified that they are covered by or eligible for statutory protections, such as minimum wage and overtime, a large percentage of survey respondents self-reporting as self-employed erroneously responded that they are covered by or eligible for these protections. Additionally, the survey findings suggest that some workers lack clarity regarding their current classification, with many workers reporting a work status different than what would be expected from the reported earnings documentation.

The employer interviews were more qualitative in nature and not representative of the broader population of employers. During the interviews, employers described a range of considerations in making hiring decisions. Employers considered direct costs per hour, including caps on the number of employees for statutory protections. They also considered the quality of work needed and the supervisory costs, given the nature of the task.