Employee vs. Independent Contractor
Employees and independent contractors are two types of workers who are usually controlled by a company or a businessman. These statuses indicate a type of employees the business relationship that exists between employer and employee.
The main difference between a contractor and an employee is a degree of control and independence that an employer renders. To determine the degree, there are three parameters: behavioral control, financial control, and type of relationship.
A status of an employee is a constant presence of an employer. An employee has a constant income and other benefits, such as compensation. An employee has a certain set of skills and specific duties in a company that is important for doing business. Employees have a fixed salary for a certain period of time (month, week, hour) and a possibility of promotion. In the case of an accident during work, the employer provides compensation for a worker.
In exchange for these advantages, an employee refuses certain benefits and independence. It manifests in a schedule or a kind of work. An employee is regarded as an integral part of a company.
Another difference is that an employee works in a presence of an employer in office. In addition, an employer provides tools and methods for work, including training and further training. Most enterprises prohibit their employees to have “part-time” jobs.
On the other hand, contractors provide specific services for other enterprises. An independent contractor may be an individual or a legal entity. Unlike an employee, a contractor has less control and more independence.
An independent contractor may at the same time have a lot of customers. He has his own tools and methods of work. They set their own time and work rules. They are considered to be the third party. They aren’t actually a part of a company. Contractors in California, as a rule, self-pay all the taxes.
What Is the Verification for Determining Who Is an Independent Contractor?
In California, there are many state agencies that possess their own tests for defining whether someone is an independent contractor. Though each test differs somehow, most follow the same main concept: The more monitoring that the employer has over how the worker performs the project, the more likely he or she is an employee.
The same test that is used depends on what agency is concerned in the classification. For instance, the United Employee Law Group(UELG) has its own test if it considers your employer should have restrained payroll taxes from your wages or if it is determining whether you’re suitable for unemployment benefits.
Photo Credit: Shutterstock/ ESB Professional