Independent Contractor Vs. Employee FAQs
To help you understand the distinction between employees and independent contractors, take some time to review these frequently asked questions:
When does an individual classify as an independent contractor vs. an employee?
There is much confusion over the classification of employees vs. independent contractors. When deciding how to classify your workers, examine your situation with the same parameters the state will use to determine an individual’s employment status. A significant factor will be the relationship between the worker and the employer. If an employer maintains substantial control over a worker, it is more likely to be considered an employer-employee relationship. Examples of this control may include:
- Appointing specific working hours
- Dictating when, where and how services will be performed
- Providing tools, equipment and other supplies
- Directly supervising the workers
- Requiring approval for time off work
- Reviewing or approving the final work product
- Requiring exclusive services
The way in which a worker is compensated can also affect how he or she is classified.
How is an independent contractor defined?
Independent contractors are in business for themselves. These self-employed workers offer various services to the public. Independent contractors may:
- Have their own established businesses
- Do their own advertising
- Carry their own insurance
- Pay their own expenses
- Set or negotiate their own pay rates
- Make their own schedules
- Offer their services to other companies
- Refuse unwanted work offers
While independent contractors have a great deal of freedom, they are not protected by laws specific to employees and therefore do not have the same rights.
What are the benefits of hiring independent contractors?
Since independent contractors do not share the same rights as employees, it makes employing them much less expensive. In fact, there are many advantages to hiring independent contractors as they generally are not eligible to receive:
- Workers’ compensation
- Paid time off
- Health insurance or any other benefits
An additional benefit of hiring independent contractors is that because they are self-employed, you are not required to pay employment taxes on their behalf.
Disputing Employee Misclassification Claims
A misclassification claim will arise as soon as an independent contractor makes a claim for unemployment insurance to the Department of Labor. Whether he/she gets unemployment insurance depends entirely on whether the Department of Labor thinks the applicant is an employee. If the DOL thinks that the applicant is an employee, it is likely to reclassify all of the employer’s employees who are “similarly situated.”
When a claim arises, it is essential to take immediate action. Obtaining the help of an experienced employment law attorney will be your first step toward mitigating the damage to your company and finding a resolution.
Contact Egan Law Firm Today
At Egan Law Firm, we provide personalized attention and strong advocacy through negotiations and litigation. As skilled negotiators and seasoned trial lawyers, we will advocate for your rights, using any means necessary. We work diligently with our clients to identify their needs and assist them in achieving their legal goals.
Contact us online to schedule a consultation or call us at 212-619-8456.