Employees and independent contractors are treated differently under the law-and entitled to very different rights and benefits. An independent contractor is not eligible for workers' compensation, overtime pay, paid time off or employer-subsidized healthcare. Therefore, hiring independent contractors instead of employees can represent significant financial advantages for an employer.
Often times, employers will try to claim that an employee is actually a contractor-in order to avoid paying for such benefits. However, simply labeling a worker as an "independent contractor" is inadequate to classify them as such. Even filing a 1099 form for a worker does not automatically make them a contractor.
The following are the core criteria used to determine a worker's true classification:
- Payment method: An employee typically receives a salary or hourly wage, which is paid out in regular increments (weekly or biweekly) throughout the year. A contractor, on the other hand, often receives a lump sum for each project they complete.
- Autonomy: Contractors have considerably more autonomy than employees. They can often choose their own work location and hours, and they have the freedom to determine the best manner of going about their work. With employees, the employer usually dictates such terms.
- Training: Contractors are usually hired for a specialized skill set they already possess. Therefore, they normally do not undergo company training, as employees do.
- Equipment: Contractors may be expected to provide any equipment necessary to complete their work, while an employer should provide such equipment to their employees.
- Permanence: An employee's job is typically seen as a permanent engagement from the onset, while a contractor's job often only lasts for the duration of their project(s).
Worker misclassification is a common problem in the workplace. If you believe you have been misclassified as a contractor and have suffered a workplace injury, it's important to consult with an experienced workers' compensation attorney to claim the benefits you deserve.