Independent contractor jobs are becoming increasingly common. They’re cheaper for an employer than hiring employees—as contractors are exempt from overtime pay as well as health and vacation benefits. However, simply labeling a worker as an independent contractor isn’t sufficient to actually classify them as such. There are certain traits that distinguish an employee from an independent contractor.
Sometimes, employers misclassify their workers as independent contractors in order to create a cost savings for the company. Studies show that as much as 30 percent of employers make this mistake—which impacts millions of workers nation-wide.
In today’s post, we examine some of the core distinctions between an employee and an independent contractor:
- Work location: A contractor may work in the same office as employees, but this is usually not required. Contractors normally have the freedom to work from an off-site location.
- Degree of instruction: In a contractor relationship, an employer normally does not dictate how or when the work be carried out. The contractor is free to use their own methods.
- Training: Since contractors often have more freedom to carry out their work as they see fit, a worker who is expected to attend company-provided trainings suggests an employee relationship.
- Provision of materials: Contractors are typically responsible for providing any equipment or other materials necessary to complete the work themselves. Any expenses they incur to complete their work are usually not reimbursed.
- Payment method: Employees are usually salaried or receive an hourly wage, whereas contractors usually receive a flat fee for their work.
- Degree of permanency: Employees typically start a job with the expectation that it will be a long-lasting working relationship. Contractors tend to work on a project basis, and their work is usually temporary. In addition, contractors can be terminated at any time—without notice.
The above are merely indicators that suggest an employee or contractor relationship—and there is some room for overlap. If you believe you are an employee who is being denied benefits based on your misclassification, you have legal recourse. It’s worth consulting with an employment law attorney about your options.