Who Qualifies as an Independent Contractor?

Who Qualifies as an Independent Contractor?

When a person is classified as an independent contractor instead of employee, this has important implications for that worker’s rights. When a company misclassifies an employee, this can also entitle that worker to additional benefits through litigation. How the person receives pay and pays taxes are two of the most important factors in explaining the difference between contractor and employee.

What Makes Someone an Employee?

You can work for a company but not be an official employee. Employees are paid on commission, hourly or salaried, or some combination of those payment methods. Employers have to issue a W-2 to an employee and also deduct state and federal income taxes and FICA taxes. A contractor, on the other hand, pays their own taxes from the payments made to them by the company.

What Kinds of People Are Most Often Contractors?

Per the IRS, dentists, doctors, lawyers, and other professional people who provide services to others are independent contractors. Other people who are legally viewed as contractors vs. employees are freelance writers, actors, auctioneers, software designers, freelancers, and musicians.

As independent contractors, workers classified in this way have no access to workers’ comp payments or unemployment insurance.

What is the IRS Method for Determining Whether Someone is a Contractor?

It can be difficult to determine, in some situations, whether a person should be paid and taxed as an employee or a contractor. If a person is working as an independent contractor, the employer can only control the result or the quality of the job rather than the method by which the work is completed.

When that same person is an employee, however, the boss can determine that the outputs happen at a certain pace, time, or place. This means that the business owner maintains control over the job’s completion. The IRS often has to look at each individual case to determine whether or not a person has been rightfully categorized as an employee instead of contractor.

What Does it Mean for an Employer to Control the Work?

If the employer controls the equipment and tools used, the hours of work, how the work is done, and the specific tasks that must be completed, this usually means the worker is an employee.

If instead the worker sets their own hours and works with little training, that person is most likely an independent contractor.

Do Independent Contractors Have Protection?

According to the U.S. Department of Health and Human Services, employment and labor laws do not apply to independent contractors. This is extremely important, for example, if someone could have been entitled to these protections and benefits as an employee but was wrongfully classified as a contractor.

If a worker can show that they should have been paid as an employee and afforded the protections under both state and federal laws, the employer could be held accountable.

An employer could be held liable for actions that attempt to avoid responsibility or proper employee protections and payment to workers who were performing as employees but were instead treated as independent contractors.

If you think you were inappropriately classified, you could have grounds to speak with an experienced employment lawyer about your next steps.

Join a Free Independent Contractor Class Action Lawsuit Investigation

Even if you are classified as an independent contractor, you may be entitled to minimum wage, overtime pay, reimbursement for expenses, and meal and rest breaks, among other employee benefits.

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This article is not legal advice. It is presented 
for informational purposes only.