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Independent Contractor vs. Employee

The way we work is changing, and more employers are allowing their employees to work remotely or independently. Businesses are now opting to pay for services from freelancers or independent contractors instead of hiring their own staff directly. While this evolution of society’s workforce can be beneficial to employers and professionals seeking more flexible conditions, it does create a bit of confusion. This distinction also leaves the door open for employers to take advantage of unsuspecting or unknowledgeable employees.

Understanding the complex legal differences between an independent contractor and an employee requires assistance from knowledgeable employment lawyers.

What Makes Someone an Employee?

In the past, it was pretty clear what defined an employee, and some of those conditions still stand true today. For instance, an employee usually works a precise preset hourly schedule established by the employer.

Additionally, an employee may qualify to receive compensation benefits. They are able to sign up for company health insurance and disability benefits. While independent contractors generally provide invoices for their services, employees receive itemized paychecks that list regular deductions that an employer is required to withhold, such as income taxes, social security contributions, and Medicare taxes.

There are certain distinguishing factors in regards to the work being performed by an employee or an independent contractor. For instance, an employee will be trained to perform the work in a manner specified by the employer. The work is to be performed at specific times and in designated work areas, which is almost always assigned by the employer. The employer also usually provides employees with specialized training to carry out their employment functions. By contrast, independent contractors usually already possess that specialized knowledge and don’t require training by the employer.

A direct employee is usually considered an “at will” member of the staff, meaning that either the employer or the employee can terminate the working relationship at any point. An independent contractor is not entitled to and cannot receive such benefits.

What Does it Mean to Be an Independent Contractor?

Typically, an independent contractor operates under different conditions than an employee. In terms of performing the work, the individual may provide professional services to multiple clients at the same time, and none of those clients should expect exclusivity. The work to be performed is generally performed at the independent contractor’s discretion. The contractor may agree to supply the work by a deadline, but, otherwise, the contractor can usually perform the work when and however he or she chooses.

An independent contractor is expected to already possess the expertise for performing the tasks for which he or she is being “contracted” to do. The individual will not receive specific training from the client/employer and will be left to accomplish the job in his or her own manner. As a professional, the independent contractor is expected to know how to provide the services for which he or she is being hired.

As an independent contractor, the professional often pays for the costs of providing the services out of the profits earned by his or her business. The client/employer is not generally expected to pay extra for operating costs and is not expected to provide additional benefits. The independent contractor is responsible for obtaining his or her own health insurance and to save money from each job to cover income taxes. Similarly, independent contractors cannot file claims for unemployment or worker’s compensation as those benefits only apply to employees.

Finally, an independent contractor will not receive overtime pay or additional compensation from his or her clients. Independent contractors usually provide the client/employer with an invoice for their services. This remains true, regardless of how long it takes the individual to complete the work. This identifies the business relationship and can be a telltale sign that the worker is not considered an employee of a specific business/employer.

While this makes it easier to identify the differences between an employee and an independent contractor, you may still have questions and confusion about your job description. This is a complex area of the law and only an experienced California employment lawyer can explain how the laws affect your specific situation. Our experienced team will help and guide you through every step of your case

Contact us today for a free consultation. We handle our cases on a contingency fee basis, which means that you only pay us if we get compensation for you. You can reach our legal team 24 hours a day by calling 213-927-3700 or emailing [email protected].

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