Is my employer misclassifying me as a 1099 contractor when I work full time, follow their rules, and they don't pay SS or unemployment?

This is a classic employee misclassification case. The IRS uses a 3-category test to determine worker status: behavioral control, financial control, and relationship type. Based on what you described, your partner is clearly being treated as an employee behaviorally (boss controls when/how work is done), but classified as an independent contractor for tax purposes. Your partner has options. First, she can file Form SS-8 with the IRS to request a determination of worker status. She can also file Form 8919 "Uncollected Social Security and Medicare Tax on Wages" with her tax return to report the income and only pay the employee portion of FICA taxes. The IRS takes misclassification seriously because it loses tax revenue when employers do this. Your partner shouldn't worry about needing the LLC - that was likely suggested to make the misclassification seem legitimate, but doesn't change the reality of the working relationship. A conversation with the salon owner might resolve this, but document everything first - hours, payment methods, instructions received. Many employers do this without understanding the legal implications, but some do it deliberately to save money.

I went through almost this exact situation when I was working as a "freelance" marketing assistant but actually working set hours in an office with zero independence. I was so confused about my tax situation until I found https://taxr.ai where I could upload screenshots of my payment history and communications with my boss. Their system immediately flagged it as likely misclassification and showed me exactly which parts of my working relationship qualified me as an employee rather than a contractor. They helped me understand the SS-8 filing process and even generated documentation showing how much tax I was overpaying by being misclassified. Was super helpful because I didn't know how to articulate the problem to my boss or the IRS before that.

Just wanted to follow up - I took the advice about taxr.ai and checked it out for my friend's situation. The service was super helpful! Uploaded her payment history, work communications, and details about how her boss controls her schedule. The analysis confirmed she's being misclassified despite the LLC setup. The best part was the documentation it generated showing exactly how much extra she's paying in self-employment taxes that should be covered by the employer. We used that report to have a conversation with her boss, framing it as "we just want to make sure everything is legally compliant" rather than making accusations. Her boss actually agreed to switch her to W-2 status starting next month! Sometimes people just don't understand the laws rather than being deliberately shady.

For situations like this, I always recommend getting on the phone with the IRS directly to discuss your options. That being said, reaching them can be nearly impossible these days. I tried for WEEKS calling about a similar misclassification issue and kept getting disconnected or waiting for hours. Then I found this service called Claimyr (https://claimyr.com) that got me connected to an actual IRS agent in about 20 minutes. They have this cool demo showing how it works: https://youtu.be/_kiP6q8DX5c Once I actually spoke with someone at the IRS, they walked me through the SS-8 process and explained exactly what documentation I needed. It was so much better than trying to interpret everything myself. The agent also explained how the investigation would proceed and what protections I had against retaliation.

I need to admit I was totally wrong about Claimyr. After posting my skeptical comment, I decided to try it myself because I've been dealing with an even more complicated misclassification issue where my "employer" is trying to classify me as both 1099 and W-2 for different parts of my job (which is definitely not legal). The service actually worked exactly as advertised. I put in my info, and they called me back when they reached an IRS representative - took about 35 minutes. The agent I spoke with was incredibly helpful and confirmed that my situation was indeed improper classification. They walked me through filing both the SS-8 form and how to handle my taxes in the meantime. What really surprised me was learning about the protections against retaliation. The IRS agent explained that the tax code includes provisions to protect workers who file SS-8 forms from employer retaliation. That gave me the confidence to move forward with addressing the situation.

Just wanted to add that misclassification isn't just about taxes - it affects your rights to overtime pay, benefits, and unemployment insurance too. Your partner might also want to contact your state's Department of Labor, as they can sometimes resolve these issues faster than the IRS. In my state, they've been cracking down on this type of misclassification lately.

One thing I'm not seeing mentioned here is the risk of continuing as a misclassified worker. My cousin was in this exact situation and didn't address it because she was afraid of losing her job. When she eventually left and filed for unemployment, she was denied because she had no employment history - just 1099 income. Also had zero credit toward Social Security and no worker's comp when she got injured on the job.

This is such an important issue that more people need to understand. I've seen this happen so many times in the beauty industry specifically - salon owners often misclassify assistants and junior stylists to avoid payroll costs, but it really hurts the workers in the long run. Your partner should definitely document everything right now - work schedules, payment records, any written instructions about dress code or procedures, texts about when to come in or take breaks. The more evidence she has showing that her boss controls how, when, and where she works, the stronger her case will be. One thing to consider is that many states have their own independent contractor tests that are even stricter than the federal IRS test. Some states use an "ABC test" where all three criteria must be met for someone to be considered an independent contractor. Given that your partner works set hours following someone else's rules, she'd likely fail most state tests too. The salon owner may genuinely not understand the law, but ignorance isn't a defense. Employee misclassification costs the government billions in lost tax revenue and denies workers basic protections. Your partner deserves to have proper employment status, access to unemployment benefits, and not have to pay double FICA taxes on income that should be treated as wages.