What Is the Difference Between an Independent Contractor and Employee?

independent contractor agreement

When starting work for a new company, understanding your role and relationship to the business is essential. Not only does this impact your rights as an employee, but it can also affect your tax purposes. If you believe you are misclassified by an employer, ensuring you reach out to a New York employment lawyer is essential to protecting your rights as an employee. Keep reading to learn more about what an independent contractor is and how they differ from traditional employees.

What Is an Independent Contractor?

An independent contractor is someone who is self-employed. Generally, these are individuals who run their own businesses and are paid by a client when their project is complete. For example, a contractor often falls into this category, as they will work with multiple clients at a time and receive payment when the work is done. These individuals file different taxes and do not receive health insurance, worker’s compensation, or benefits from an employer as they have to supply these themselves.

Generally, these workers decide what projects they want to take on, whereas an employer will assign work to traditional employees. Similarly, they set their own hours, which often offers flexibility as opposed to workers who perform their duties during a specific set of hours. Also, if someone wants to end a working relationship, traditional employees tend to have less liability, whereas contractors have more liability when terminating a contract.

For example, a freelance graphic designer will work for multiple clients at a time, often providing an agreement before the project is started. Once the work is complete, the client pays the designer the agreed-upon price. In some instances, freelance employees will work as part of a network, but are still considered independent workers.

What Happens if an Employee Is Misclassified?

Often, it is easier for employers to classify their workers as independent contractors, as they do not have to provide benefits and protections that traditional employees are guaranteed. However, if you are misclassified, this can cause issues down the line, as you will have to pay out of pocket for your own social security and healthcare.

If you believe you have been misclassified as an independent contractor, speaking to your employer is the first step to addressing any concerns. However, if speaking with your boss does not resolve the confusion, you can file a form with the IRS to help determine your status as an employer. However, the IRS can classify you as an employee, but your employer may still treat you like a freelancer. They do, however, risk getting in trouble with the IRS.

When you aren’t being treated fairly, and your employer refuses to classify you correctly, ensuring you contact an attorney as soon as possible is essential to getting the compensation you deserve. At Miza Law, we believe that you should be compensated properly with the correct wage and benefits. Contact our legal team today to learn how we can help you if you’ve suffered from being classified as an independent contractor.