Labor & Employment Law
Independent Contractor vs. Employee: What You Need to Know
The distinction between an independent contractor and an employee is a critical aspect of workplace classification. Misclassification can impact a worker’s rights, access to benefits, and protections under employment laws. For employers, it can lead to legal and financial repercussions, including penalties for failing to comply with labor regulations.
Independent contractors operate as self-employed individuals, providing services on their own terms with limited oversight. Employees, on the other hand, work under the direct control of an employer and are typically entitled to benefits and protections under federal and state labor laws. Understanding the factors that determine proper classification is essential to ensuring that your rights and obligations are upheld. If you suspect your classification is incorrect, knowing the key differences and steps to address potential misclassification can make all the difference.
Frequently Asked Questions
A properly classified independent contractor is usually one who is in business for themselves and performs services as a contractor without much oversight or control by the employing company. An employee, on the other hand, is under the direct control and oversight of their employer.
Key differences include:
- Employment laws like wage and hour, whistleblowing, and anti-discrimination laws typically don’t apply to independent contractors
- Independent contractors typically don’t receive fringe benefits like insurance, retirement, and paid time off
Whether a worker is misclassified depends on various factors. Most employment laws focus on the degree of control the employer has over the “independent contractor.” Key factors include:
- How and when they are paid—hourly, salary, piece rate
- Who provides the tools and equipment to do the job
- Whether the worker is able to work for other employers
- Indefinite v. temporary relationship
- Who decides when and how the work will be performed
- Who assigns the work
No one factor is entirely determinative and each case depends on its own facts. However, if the evidence strongly weighs in favor of direct control over the worker, it is probably an employee relationship.
No. Just because you signed an agreement labeling yourself as an independent contractor is not conclusive proof that you are one. These agreements are just one factor in the analysis.
Independent contractors have several options:
- File a claim for unemployment benefits (the Florida unemployment agency will hold a hearing)
- Submit complaints to the Internal Revenue Service regarding classification status
- Consult with an employment law attorney to review your situation