Independent Contractors Versus Permanent Employees – Understanding the Difference
These days, landing a job can be exciting, but it is important to read the fine print when it comes to your employment status. If you expected to be paid and treated like a permanent employee and are finding yourself put into an independent contractor status, this can be a rude wake up call if you have been doing a job for months. Sometimes this isn’t discovered until one is doing their taxes, and you may end up owing more than expected. If you feel that you have been unfairly put into the independent contractor title, having a better understanding of this classification is key.
What Defines an Employee Versus an Independent Contractor?
Depending on how much control a company has over your workload and schedule can help define your employment status. If there is training specific to your position and the role within a company, this might be more of an employee role than a contractor. This might give an indication if a business has more than contractual control over an employee. Contracts that indicate compensation traditionally viewed as employee benefits can show that an independent contractor might be the wrong classification. Examples could be vacation hours, sick leave, health insurance options and pension plans.
Independent contractors should have the freedom to work with many different vendors and clients. If an employer is limiting one’s independent options through agreements, contracts, or time constraints, this can be against the spirit of being an independent contractor. Payment and control might indicate more of an employee role than a contractor role.
What Type of Work are You Doing?
If you are an independent contractor, you should have control over your workday and business. If your work is playing a huge part in an employer’s livelihood, you might be more than a contracted employee. Hiring on contract employees is a workaround many businesses try to do to avoid being liable and to save on taxes and benefits for employees.
If you are working on-site and using equipment or tools that are your employers, this might fall out of scope with independent contractor title. If work is long-term and continued employment is an expectation, this might be more of a permanent status than just a project-based role. If you are in a job currently that feels more like a permanent role, start this discussion with your employer and possibly a labor attorney to make sure you are protected.
The Pros and Cons of Being an Independent Contractor
While there might be some benefit to contract depending on the work you do, it is a good idea to fully understand the pros and cons first. Freedom is great, but so are protections and rights. Independent contractors might find they aren’t even making minimum wage once work is really quantified. Without benefits, overtime, and vacation or sick pay, this rapidly diminishes hourly rates as well. Not having disability insurance and social security can affect an independent contractor in the long run. With unstable economies, it can be hard to say to employment that comes your way, but it is important to make sure what you are pursuing will be in your best interests and is worth it.
The gig economy that is becoming popular boasts that one can profit from working from home or on one’s own schedules. What this might inadvertently do is make it easier for companies to pay less and claim fewer employees. If you have a clear understanding of a possible employment position coming your way, you will be less likely to be taken advantage of. If you feel you have been labeled an independent contractor unfairly or without your knowledge, contact us to see what your options are moving forward.
If you have been injured on the job and you need assistance filing for workers’ compensation or your claim has been denied and you need to appeal, the Law Office of Joshua Borken can help you. When you work with Josh, you have a St. Paul workers’ compensation attorney advocating for you as he fights for your right to the compensation you deserve.