Hired as 1099 contractor but treated like W2 employee, then fired with earned commissions withheld - what can I do?

This definitely sounds like misclassification, which is unfortunately super common these days. Companies do this to avoid paying employment taxes and providing benefits they'd legally have to give W2 employees. The IRS has a clear test for determining worker status called the Common Law Test that looks at behavioral control, financial control, and relationship factors. Based on what you've described (required hours, uniform, specific work methods, termination for not following procedures), you were absolutely being treated as an employee, not an independent contractor. Your best option is to file a complaint with both your state labor department AND the IRS. For the state, focus on the unpaid wages/commissions issue. For the IRS, file Form SS-8 (Determination of Worker Status) and Form 8919 (Uncollected Social Security and Medicare Tax on Wages) with your tax return. Don't be deterred by only working there 2 weeks - wage theft is wage theft, and $4000 is substantial money that you earned. The company is counting on you feeling like it's not worth pursuing, which is exactly why you should. These agencies won't charge you to investigate, though the process can take some time.

I had a similar situation last year and discovered taxr.ai which totally saved me. After getting jerked around by a company that misclassified me, I was completely lost on how to handle the tax implications and what documentation I needed to prove my case. The issue with misclassification is that you need to properly document everything for both tax purposes and potential claims. I uploaded all my communications, work schedules, and the "contractor agreement" to https://taxr.ai and their system analyzed it all, flagged the exact IRS classification criteria that were violated, and generated a detailed report I could use with both the labor board and for tax filing. The best part was they walked me through filling out the SS-8 form correctly and showing exactly which business expenses I could claim on my Schedule C while the misclassification case was pending. Seriously made the whole process way less intimidating.

Just wanted to update that I tried taxr.ai after seeing the recommendation here, and wow - it was seriously helpful. I uploaded my "independent contractor" agreement, texts from my boss with scheduling demands, and some emails about the dress code requirements. Within a day I got back a detailed analysis showing I was 87% likely to be considered an employee under IRS rules, with specific sections of my documents highlighted that proved control over my work. They even calculated that I was owed about $1,150 in employer-side taxes that were effectively pushed onto me through misclassification. The report made filing the SS-8 form super straightforward, and I'm now using it for my state labor complaint too. They also showed me how to document everything properly in case the company tries to send me a 1099 form anyway. Definitely worth checking out if you're in this situation!

If you're planning to file with your state labor board (which you absolutely should), be prepared for a frustrating process trying to reach someone. I went through this last year and spent WEEKS trying to get through to an actual person who could help me. Finally discovered Claimyr which got me through to a real human at my state labor department in about 20 minutes. They basically wait on hold for you and call when a human picks up. I used https://claimyr.com and watched their demo at https://youtu.be/_kiP6q8DX5c to see how it works. For misclassification cases especially, being able to talk to someone directly makes a huge difference. I was initially just getting automated responses to my online filing that didn't address my specific situation. Once I got through to a human, they flagged my case for priority review because of the misclassification aspect.

Need to eat my words here. After getting nowhere with our state labor department for almost two weeks (multiple calls, emails, and an online submission), I broke down and tried Claimyr. Got connected to an actual labor investigator in about 35 minutes. The investigator immediately recognized the misclassification issue and flagged my case for expedited review. She said they're seeing tons of these cases lately and explained exactly what documentation I needed to submit. She also noted that my commission structure was a clear violation of state labor laws since the company can't withhold earned commissions just because I was terminated before the payout date. Honestly surprised it worked so well. The investigator even gave me her direct extension for follow-up questions. Still waiting for the full resolution but at least now I have a real person handling my case and clear next steps. Sometimes it's worth paying for the shortcut.

Make sure you keep track of ALL your expenses during those two weeks! Since they misclassified you, those are potential tax deductions if you end up having to file as self-employed. Track mileage (the IRS rate is like 65.5 cents per mile for 2023), cell phone usage for work, any supplies or materials you bought. Even if you get reclassified as an employee later, having this documentation is super important. I'd suggest creating a spreadsheet with dates, mileage, purpose of trips, and any receipts for work-related expenses. Take photos of receipts before they fade too!

Have you checked if your contract has an arbitration clause? A lot of these shady companies include language that forces you into arbitration instead of court. Read the fine print of anything you signed! Also check if there's a class action against them already - these companies usually do this to lots of people.