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Oliver Cheng

ESD denied my claim after employer changed me from W-2 to 1099 contractor - same job, same duties

My company just went through a 'cost-saving restructure' last month and converted several of us from full-time employees to contractors. Nothing else changed - same manager, same responsibilities, same workload, same desk - they just stopped my benefits and now I get paid through a 1099 instead of W-2. When hours got cut (I'm down to about 15 hrs/week from 40), I applied for partial unemployment to help cover the gap. ESD just denied my claim saying I'm an independent contractor now and not eligible. But this feels wrong! I didn't choose to become a contractor - they forced this change on me. I don't have any other clients, they provide all my equipment (laptop, email, phone), and I'm still required to work specific hours. Has anyone dealt with this employee-to-contractor conversion before? Can I appeal the ESD decision based on being misclassified? I filed my weekly claims while waiting for the determination, should I keep doing that during appeal?

You absolutely should appeal this! What your employer did is called "misclassification" and it happens all the time. If you're still working under their direction with their equipment and schedule, you're still an employee under WA state law, regardless of what tax form they use. File your appeal within 30 days of the denial determination. In your appeal letter, specifically mention that you're being misclassified based on these factors: - You don't have multiple clients - The company controls your work schedule - They provide all equipment - You perform the same duties as before - You didn't independently establish yourself as a business Keep filing your weekly claims during the appeal process. If you win (and you have a good case), you'll get backpay for all those weeks.

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Thank you so much for this! I'm going to file the appeal today. Do I need to get a lawyer or can I handle this myself? The determination letter says something about a hearing with an Administrative Law Judge and I'm kind of freaking out about that part.

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happened to me 2!!! my boss said the same thing that i was a "contractor" but i was really an employee. ESD said no at first but i appealled & eventually won. took like 5 months tho so be ready to wait

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5 MONTHS?! That's completely ridiculous! The system is designed to make people give up. Did you have to keep claiming every single week during that entire time? I've heard horror stories about people missing just one weekly claim and losing everything.

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Okay so this is actually something I deal with ALL THE TIME in my HR consulting work. What your employer did is 100% illegal wage theft. They can't just "convert" you to avoid unemployment taxes and benefits. The IRS has specific tests for employee vs contractor status - it's not something companies can just decide based on what's cheaper for them. Print out the IRS 20-factor test (Google it) and highlight all the factors that show you're really an employee. Bring this to your appeal hearing. You're going to win this case - I've seen dozens exactly like it. And yes, KEEP FILING weekly claims! You'll get backpay if you win.

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my cousin had the same thing happen but she nevr won her appeal cuz her boss lied and said she had business cards and worked for other ppl too which wasnt true at all!! the judge just believed him tho

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If you're having trouble reaching someone at ESD to discuss your case (which is extremely common), you might want to try Claimyr. I was stuck in a similar situation and couldn't get through on the phone for weeks. Their service connected me to an ESD agent in about 20 minutes when I'd been trying for days. They have a video showing how it works: https://youtu.be/7DieNd3C7zQ?si=26TzE_zGms-DODN3 Their website is claimyr.com - it was honestly worth it to actually talk to someone who could explain exactly what documentation I needed for my appeal.

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Thanks for the tip. I've been calling ESD every day this week and just get the "call volume too high" message and disconnected. I'll check out that video and see if it helps. I really need to talk to someone directly about my specific situation.

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im confused by this. if ur getting a 1099 now arent u technically self employed? thats what my tax guy told me when i did uber last year. u have to pay both sides of the taxes urself now (employer and employee part). maybe u can file for some small business assistance instead?

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It doesn't work that way. Just because someone gives you a 1099 doesn't automatically make you a legitimate contractor. Washington state uses specific legal tests to determine if someone is truly an independent contractor or if they're misclassified. Based on what OP described (same duties, equipment provided, working at company location, no other clients, etc.), they're almost certainly misclassified. Companies do this to avoid paying unemployment insurance, workers comp, and benefits. It's illegal but extremely common.

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THIS EXACT THING HAPPENED AT MY LAST JOB!!! The whole department got "converted" to contractors and ESD denied everyone initially. We filed a group complaint with L&I about worker misclassification and suddenly the company backtracked REAL QUICK and "rehired" everyone as W-2 employees again. They knew they were breaking the law! Your employer is COUNTING ON you not knowing your rights or being too intimidated to fight back. If multiple people at your company were affected, consider talking to them about filing a group complaint with Labor & Industries. The penalties for companies doing this are HUGE.

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That's interesting - at least 6 other people in my department were converted to contractors too. I'll reach out to them and see if they're having similar issues. A group complaint might have more impact than just me fighting alone.

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One important thing no one has mentioned yet: Document EVERYTHING about your working conditions right now. Take photos of your workspace if you're in an office, save emails showing they're directing your work schedule, take screenshots of any company systems you have to use, etc. Also, start tracking exactly how much control they exert over HOW you do your work. True contractors decide their own methods, hours, etc. If they're telling you exactly when and how to work, that's evidence you're misclassified. Bring all this evidence to your appeal hearing. The judge will specifically be looking at the degree of control the company has over your work.

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This is incredibly helpful - thank you! I've actually been required to attend daily team meetings at 9am sharp, use their project management system, and follow all the same protocols as before. I'll start documenting all of this immediately.

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i h8 when companies do this!!!! my friend works at a tech company and they did the same thing last year during "restructuring" and called it a "flexible work arrangement" lolol there is NOTHING flexible about it its just a pay cut without saying pay cut

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make sure u file ur appeal quikk. u only have like 30 days from when they sent the denial i think. alot of people miss the deadline.

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Thanks for the reminder! Just checked my determination letter and I have exactly 8 days left to file. Going to do it today for sure.

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