Tracy Colman  |  June 21, 2019

Category: Legal News

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Independent contractor written on wallIn an age where many businesses attempt to misclassify workers to save on business expenses, many people wonder if they are an independent contractor or an employee. This question seeks to uncover not what their actual documented status is, but rather what should it be under the federal Fair Labor Standards Act (FLSA).

Whether a worker is an independent contractor or an employee is largely determined by how much control a business exerts in its relationship with the worker, according to the U.S. Department of Health and Human Services.

One of the first aspects of determining the locus of control is whether there is a signed written contract for services to be completed within an established timeline, or an employment agreement spelling out benefits such as health, life, and disability insurance, paid time off, or a retirement plan.

A second aspect is whether the duties of the job in question are central to nature of the hiring business. As an example, the government of a small city whose principal aim is to manage regional issues within the context of local law would likely hire an administrative professional—administering and managing is what a city does.

On the other hand, if the City Hall needed roof repairs, this is not ongoing or central to the business of the municipality. This is where it would be more common to see a written contract for services dependent upon completion of the roof repair with a roof construction specialist.

This specialist has pursued his or her own training, more than likely has a  separate stand alone business where they have to compete for the City’s business with others similarly skilled, and have their own set of tools and other equipment to finish the job. They likely set their own hours, juggle other jobs with other businesses and are paid either at job progress intervals or at completion.

If, following our example further, the City attempts to train a worker to accomplish a roofing job–stipulating when the work hours must be invested and how the work must be accomplished–that roofer might be more of an employee than a contractor. This level of behavioral control is well beyond that of a contractor.

Differences in How Work is Sought

According to Health and Human Services, there are significant differences in how an employee seeks and gets work when compared to an independent contractor.

First, a potential employee would fill out an application, interview for a position, and be given a job offer. If accepted, additional data would need to be provided the business such as date of birth, immigration of citizenship status, and marital state.

An independent contractor would just meet with a point of contact person within a department who wants a task completed, provide a proposal of services, and enter into a contract with a legal or procurement department which stipulates the scope of work to be done.

Differences in Pay Methods and Taxation

As indicated by The Balance, a common difference between an independent contractor or an employee is how they get paid. Employees are paid on an hourly or salaried basis and are allowed overtime pay. Overtime pay is one and one-half times their base rate of pay for any hours worked over 40 in a seven-day workweek. They are subject to withholding of federal, state, and social security taxes, and their income is reported annually on a W-2 form.

Independent contractors are not subject to any withholding and are expected to pay their own self-employment taxes quarterly throughout the year. The business employing them reports payments in excess of $600 on IRS form 1099.

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.

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One thought on Am I an Independent Contractor or an Employee?

  1. Sharon oneil says:

    Add me please

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