There are advantages to being an independent contractor rather than an employee, as independent contractors can choose which businesses to contract with and are not under the direct supervision of an employer as they go about performing their work.
However, there are fewer legal protections for independent contractors than there are for employees. They are not eligible for workers’ compensation or unemployment benefits, for example. They are responsible for deducting the correct amount of taxes from their earnings each quarter, and while they have more control over the work process than most employees do, independent contractors still have work specifications to follow.
Problems can arise when the lines between employee and independent contractor are blurred. The distinction between the two is drawn from the control that the employer exercises over the independent contractor when compared to the autonomy the independent contractor has from an employer.
Factors that determine the classification include:
— Whether the business relationship is temporary or permanent
— The degree to which the work performed constitutes an integral component of the business
— The profit/loss opportunities for the worker
— How much the worker invests in supplies and equipment
— The degree of foresight, creativity and initiative necessary for the worker’s success in the open business market
— The type and extent of the control exercised by both parties
Some companies attempt to distort the relationship by essentially misclassifying their employees as independent contractors to avoid providing them with benefits to which they are legally entitled. In such cases, it may be helpful to seek the counsel of an employment law attorney.
Source: FindLaw, “Independent Contractors: Overview,” accessed April. 10, 2015