Why Does it Matter if a Worker is Treated as an Independent Contractor?
By definition, independent contractors are in business for themselves, which means they are not provided the same legal protections standard employees enjoy, i.e. benefits, unemployment insurance, etc. Your classification as an employee will determine your eligibility for certain protections and benefits under federal law such as minimum wage and overtime.
Because independent contractors typically cost less than employees, some employers misclassify their workers as independent contractors even though they are actually employees. When employers mistakenly or deliberately misclassify an employee, it can result in the employee receiving wages below the legal minimum wage and/or missing out on overtime pay that is owed to them.
The Differences Between an Independent Contractor and an Employee
Determining whether you are an employee or an independent contractor depends primarily on how much control your employer has over the work you perform. Among other factors, you are more likely to be an independent contractor if you are self-employed and:
Set your work schedule;
Provide your own tools and equipment;
Do not have taxes withheld from your paycheck; and
Work for more than one company
True independent contractors have the right to accept or refuse projects, determine when, where and how they will carry out their work, set their own hours, and exercise full control with respect to continuing a working relationship when the contracted project is complete. Numerous additional complex factors may be taken under consideration when determining whether an individual is an independent contractor or is actually an employee who is entitled to all of the benefits and rights of employment.
Bottom LIne: If you Are Treated Like an Employee You Should Receive Pay and Benefits of Being an Employee
Whether or not a worker is properly characterized as an independent contractor can occasionally be a tricky analysis. But usually it isn’t. There is an old saying that “If it walks like a duck and quacks like a duck then it’s probably a duck.” Well the same principle applies here. If a worker is treated like employee — the boss directs most work details, the boss provides work equipment, the boss sets the work hours, etc. — then the worker is probably and employee rather than an independent contractor.
