Independent Contractor vs Employee
So-called "independent contractor vs employee"
or "Independent contractor or employee?" legal issues arise when
employers hire workers as independent contractors,
but then attempt to control them as employees. Employers are entitled to
control employees to a large degree, but not independent contractors.
In fact, companies are clients of independent contractors (ICs), not "employers" in
the traditional sense. Clients are entitled to control the projects for
which they hired ICs, but they are not entitled to directly control the
ICs.
Even so, there is no Federal
"Independent Contractor vs Employee Law" per se, that specifically
protects ICs. Because employment laws are
designed to protect employees, they don't specifically protect ICs either.
Senator Barack Obama introduced a bill referred
to as the Independent
Contractor Proper Classification Act, which might become the first
so-called Federal "Independent Contractor vs Employee Law."
For example, employment laws don't require employers to pay overtime or
the minimum wage to independent contractors
or provide them with mandatory employee benefits,
as they require for employees. The laws also don't require employers to
withhold and pay Federal, state and Social Security (FICA) taxes on behalf
of independent contractors, as they require for employees.
As a result, it's to the advantage of employers to hire workers as independent
contractors on paper, but then attempt to control them as employees. Independent
contractors often feel pressured to put up with it, to keep their contract
jobs and earn favorable referrals for future jobs.
But, by law, workers are either independent contractors or employees,
with no in between. Subsequently, independent contractors do have avenues
of relief for such exploitation by employers. That's because it violates
employment laws that have related independent contractor vs employee regulations,
despite that the laws don't specifically protect independent contractors.
Independent contractor vs employee regulations prohibit employers from
misclassifying employees as independent contractors, not to specifically
protect ICs per se, but because it deprives employees of their rights under
the relevant laws. In turn, employers are not allowed to control independent
contractors as employees. Relevant laws and enforcing government agencies
include, but are not limited to:
Additionally, the Internal Revenue Service (IRS) enforces independent
contractor vs employee rules that prohibit misclassification of Form W-2
workers (employees) as Form 1099 workers (ICs). The IRS calls them Common-Law
Rules, because they're based on common
law. At this writing, the IRS generally explains its Common-Law Rules
in "Topic
762 - Independent Contractor vs Employee" and related publications.
To determine if workers are independent contractors or employees by law,
among other factors, relevant government
agencies and the courts examine the employment relationship for the
degree of control an employer has over the workers in question, along with
the degree of independence the workers have from the employer. The examination
is often referred to as an "economic-realities test" or "right-to-control
test".
Because government agencies and the courts consider the whole picture
regarding alleged independent
contractor vs employee misclassifications, a single factor might not determine
whether a worker is an independent contractor or employee by law; on the
other hand, it might, depending on how extreme it is.
But, in general, the more an employer attempts to control a worker, the
more likely it is that the worker is an employee by law. The bottom line
is, independent is the operative word in independent contractor under
independent contractor vs employee rules and regulations.
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