Employee vs Independent Contractor
Are you an employee or an independent contractor? And really, why does it matter? You’re getting paid all the same, aren’t you?
Not necessarily. There are distinct legal differences that you need to understand between the two, and whether you’re an employee or an independent contractor can affect your rights in the workplace.
How is your status determined?
In general, if you’re self-employed, you’re probably an independent contractor. If you work for a single company, you’re probably an employee. The California Division of Labor Standards Enforcement presumes that a worker is an employee, but each state agency has its own tests to decide which category someone falls into. The basic gist is this: The more control an employer has over how an individual does their work, the more likely they are in an employer-employee relationship. State agencies also look at other factors, including whether you’re doing work that a company regularly performs itself and how permanent your working relationship is with the company.
What is the difference between the two?
As an independent contractor, you’re performing work that a business would contract with you to do, such as writing or web design. You don’t just work for one employer, but contract with multiple clients. You set your own hours and fees, work from home or your own office, and set the terms of the contract with each client. An employee works for one business and has their work terms determined by the employer, such as hours, wages, and a supervisor who reviews their work.
What are the benefits to employees?
To begin with, an employer has to pay minimum wage, overtime, and payroll taxes for employees, as well as cover them under workers’ compensation and unemployment insurance programs. That’s not the case for independent contractors. Employers provide employees with benefits such as health insurance, sick leave, and 401(k) accounts. Independent contractors get none of these. Employees also are covered by state and federal anti-discrimination laws. Finally, employees usually get an hourly wage or yearly salary. Independent contractors are typically paid by the project, and only when it’s completed.
I think I’ve been misclassified. What can I do about it?
If you think you should have been treated as an employee and not an independent contractor, you may have a wage and hour claim against the company. Contact the United Employees Law Group to see if your rights have been violated and what can be done about it.
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