The basic difference is obvious: independent contractors are self-employed and employees work for employers. But employees and independent contractors have different rights. For example, independent contractors can’t sue for wrongful termination. However, employers sometimes misclassify employees as independent contractors. Misclassification may be accidental. But some employers intentionally misclassify employees as independent contractors to try to get out of paying employment taxes and giving employees rights. So how do you know if you’ve been misclassified? A court won’t just look at your job title or whether you have a contract. Figuring out whether you’re an independent contractor or an employee is very complex and depends on multiple factors. Here are three of the big ones:
Nature of the relationship
Independent contractors use contracts to form relationships with their clients or customers. Employment does not require a contract. Employees generally work for one employer, but independent contractors may have any number of customers. Employees perform work that is key or integral to the employer’s business. However, independent contractors tend to provide peripheral services and products.
Level of control
Do you have control over when, where, and how you do your work? Most employees have to adhere to their employer’s schedule and business hours. However, independent contractors frequently set their own schedules. Employers have the power to tell employees when, where, and how to perform their job duties. Independent contractors generally have the ability to decide how they will do their work, even if the client dictates the final result.
Materials and equipment
Employers usually provide employees with the tools they need to do their jobs. Independent contractors usually use their own tools. Consider two graphic designers, John and Jane. John is an employee who works in the marketing department of a large corporation. The corporation provides John with a laptop and software he needs to perform his job duties. Jane is also a graphic designer; however, she’s an independent contractor. She uses her own laptop and software to perform her work.
But not all cases are so clear-cut. For example, let’s say that John takes a new job with a start-up graphic design firm. The company is brand new and doesn’t yet have enough funds to provide employees with laptops. John agrees to use his own laptop until the company has more money. Here, the fact that John uses his own equipment doesn’t mean he’s an independent contractor.
Talk to a lawyer.
You should consult with an employment law attorney to determine whether you have been misclassified. A lawyer can review the specific facts of your case. If you believe you’ve been misclassified, contact Alan Lescht and Associates, P.C., to schedule a consultation. We handle misclassification cases and represent employees and independent contractors in contract disputes and other work-related matters.