1099 Misclassification Back Pay 2027 Calculator
Calculate back pay owed when a worker was misclassified as 1099 contractor instead of employee — unpaid overtime, FICA, benefits, and FLSA liquidated damages (2x).
The Six-Factor Economic Reality Test
DOL uses a 6-factor 'economic reality' test: nature of work, permanency, skill required, investment, control, opportunity for profit/loss. Most W-2 workers misclassified as 1099 fail factors 1, 4 and 5.
What Back Pay Includes
Unpaid overtime (40hr+ at 1.5x rate). Employer's share of FICA (7.65% of total wages) the contractor paid on Schedule SE. Lost benefits: health insurance, 401k match, PTO, FMLA. State unemployment insurance contributions.
FLSA 2x Liquidated Damages
Federal FLSA awards 2x damages — unpaid wages PLUS equivalent amount as liquidated damages. So $20k unpaid OT = $40k claim. Employer can avoid if shows 'good faith' but threshold is high. State laws may add treble damages.
Statute of Limitations
Federal FLSA: 2 years standard, 3 years willful violation. State wage claims: varies (NY 6 years, CA 4 years, TX 4 years). Filing IRS Form SS-8 starts a separate IRS classification review for tax purposes.
Source: dol.gov FLSA worker classification, irs.gov SS-8 determination. Last updated: May 2026.