What is my boss trying to do?

[Mrs.Jones]

Am I being paid according to VA state law? I am a
licensed real estate agent in Virginia and my license is located at the firm where I perform administrative duties. I have not received a commission directly related to a real estate transaction in over a year. I do not follow a set schedule, however, I am expected to show up everyday and complete a list of tasks. I am considered the office manager. Before the current owner took over the company I was paid hourly and federal withholdings were taken from my check. Now I am paid by the hour and there is nothing taken from my check. My employer tells me I am a subcontractor and he is paying me as if the wages are commission. We have NO formal contract regarding this payment arrangement. My employer told me because I am a subcontractor that he does not have to take out the normal federal with holdings. I trusted my employer, as he has also directed me on how I should claim the income on my
federal 1040, including how much and what kind of deductions to take. When I raised questions about the income and the withholdings, he went as far as to fill out my schedule C. He has also paid me holiday pay. I just recently realized that this may not be legal. I asked the firm’s accountant who said that the arrangement is between me and my boss and she absolutely would not discuss it. This raised a red flag for me, as it was more of an avoidance of the subject rather than a reluctance to answer my questions. In the past she has never hesitated to answer any questions. Am I correct in assuming that there is something wrong here? When I read deeper into the federal guidelines regarding employer/employee relationships it seemed to be that I should be considered an employee and subject to federal withholdings and so should he. I think he is doing this to avoid certain expenses, and the higher cost of errors and omissions insurance. What can I do? I have been paid this way for 3 years, and they say “ignorance of the law is no excuse” Although I will be unemployed, I am considering resigning, because I am terrified that I can get into a ton of trouble for accepting compensation under these particular circumstances.