Michigan Public School Employee Misclassification
Across Michigan, thousands of individuals are hired by school districts as “contract workers,” “third-party employees,” or “non-district staff,” even though they perform the same work, under the same supervision, and with the same responsibilities as regular district employees.
If this has happened to you, your school district may have illegally misclassified you, costing you years of retirement credit, pension contributions, and other employee benefits you were legally entitled to receive. This practice is not just unfair, it may violate Michigan law as well as IRS regulations.
What Is Misclassification?
“Misclassification” occurs when a public school district labels a worker as something other than an employee, usually a contract employee, even though the district controls the worker’s job duties, schedule, training, discipline, and day-to-day work. School districts often do this by routing paychecks through third-party staffing agencies. However, under the law, the label does not control. What matters is the economic reality of the working relationship. If the district controlled your work, the law likely considers you a district employee, regardless of your title.
Michigan Law Protects You: MPSERS Eligibility Depends on the Job You Performed—Not Who Cut Your Paycheck.
The Michigan Public School Employees’ Retirement Act (“MPSER”) requires that employees performing core school functions be included in MPSER. Michigan courts have repeatedly held that districts cannot avoid this obligation simply by outsourcing payroll or by calling someone a “contractor.”
In two landmark decisions, Michigan Courts have made this clear. In 2013, The Michigan Court of Appeals held that workers employed through a third-party staffing agency, but who were supervised by and performed core functions for a school district, could still qualify as school employees for retirement purposes. In 2020, the Court reaffirmed that MPSER eligibility hinges on the economic reality test, which examines many factors including:
- Who controls the work
- Who directs and supervises the worker
- Whether the work is integral to the school’s mission
- How the worker is compensated
IRS Violations: Many Misclassified Workers Were Also Illegally Excluded From 403(b) Retirement Plan Enrollment.
In addition to MPSER violations, affected employees may have recourse through the Internal Revenue Service (“IRS”). Many school districts offer a 403(b)-retirement plan, which are often administered by outside companies. Under IRS Code §403(b), all employees must be allowed to participate unless they fall under a narrow set of exceptions. Misclassification is not a lawful exception.
If you were denied the right to make 403(b) contributions because the district labeled you a contractor, your employer may have violated federal tax law and IRS universal availability rules.
Our office is actively investigating misclassification cases across Michigan and representing individuals who were wrongfully denied retirement benefits by public school districts.
We can help you:
- Determine whether you were misclassified
- Calculate your lost retirement earnings
- Demand corrective contributions
- Pursue claims against your district
- Protect your rights under state and federal law
If you believe you were misclassified by a Michigan school district, denied MPSERS benefits, or excluded from a 403(b) plan, contact us for a free case evaluation. Your retirement matters—and the law is on your side.