Independent Contractors and Employees
Almost all of the workers hired by an employer will be classified as either independent contractors or employees. Independent contractors generally have more freedom over their work, and employees are usually more closely managed by an employer. In any event, an employer has a number of distinct responsibilities for independent contractors and employees.
Classifying the Worker
A number of factors must be considered when deciding if a worker is classified as an independent contractor or an employee. Generally, if a worker controls his or her own work, owns the tools or other methods of the employment, and is not actively supervised, then the worker will be classified as an independent contractor. However, if the employer controls all of the instrumentalities of the work relationship and the worker is supervised by managers who are employed by the employer, then the worker will likely be classified as an employee. Even if an employer classifies a worker as one classification or another, government authorities may disagree. Indeed, employers often wish to classify workers as independent contractors so they have less responsibilities to the workers, but they may later be forced to provide the benefits of employees. As a result, employers with any questions about how they are classifying workers should talk with counsel about how they are classifying their independent contractors and employees.
Tax Matters
Independent contractors and employees are often treated differently when it comes to taxes. For employees, companies often need to deduct payroll taxes from income provided to the workers. This money is provided to government authorities, and at the end of the year, the employee receives a W-2 form so that the employee can file taxes with accurate information about how much money they were paid and how much was deducted for taxes. In addition, companies usually need to pay a portion of Social Security and Medicare taxes for employees.
Independent contractors are treated differently. Employers generally do not withhold taxes for independent contractors throughout the year. Rather, independent contractors receive a 1099 form from companies at the end of the year showing all of the income they received from a given business. Moreover, companies normally do not need to pay Social Security and Medicare taxes for independent contractors, and the independent contractors need to pay all of this tax for themselves. Moreover, employers may not need to acquire worker’s compensation for independent contractors and companies evaluating this and other benefits of independent contractors should speak with an experienced employment law attorney.
Legal Responsibility
Another substantial difference between independent contractors and employees is the legal responsibility an employer has towards each classification of worker. Employers generally have more legal responsibilities to employees rather than independent contractors. For instance, employers usually need to provide leave to employers to handle medical issues, for jury duty, and for other situations in certain circumstances. In addition, employers generally cannot discriminate against employees for protected classifications such as race, color, religion, sex, and national origin. Moreover, employers cannot create a hostile work environment for employees based on the protected classes like the ones noted above.
However, independent contractors are provided less protections under the law. Independent contractors may not be entitled to leave in the same way that employees receive. In addition, independent contractors may not be covered by the employee discrimination laws that protect employees. There have been more recent efforts to provide additional protections to independent contractors, and because protections may vary from jurisdiction to jurisdiction, it is important to speak to counsel when considering the legal responsibilities of each classification of worker.
Civil Liability
The classification of workers between independent contractors and employees can also have a substantial impact on the civil liability of a business. It is more likely that a company will be held liable for the acts of its employees. Claimants need to prove that the employee committed misconduct in the course of their employment in order to hold the employer liable for the acts. This generally means that the acts of the employee served the interests of the employer. Sometimes, an employee will take a detour even when they are on the clock and commit acts that do not serve the ends of the employer, and an employer may not be held liable for these acts. However, many of the acts of an employee committed in the course of her or his employment will make employers liable.
However, it is generally more difficult to hold an employer liable for the acts of an independent contractor. This is because an independent contractor generally has more control over their work and the instrumentalities used to accomplish that work. There are certain times when an employer has a non-delegable duty and will be held liable for the acts of independent contractors since they should have been overseeing their work. Such a duty my arise when a company hires an independent contractor to perform dangerous work that could harm others, and in such instances, businesses should carefully supervise and evaluate the work to be performed.
The Rothman Law Firm has substantial experience advising employers on employment law matters, including how to make determinations between independent contractors and employees. If you are looking for an experienced employment law attorney to handle your worker classification inquiry or other legal issue, please feel free to contact The Rothman Law Firm to request a free consultation.