The distinction between the rights and responsibilities of employees versus independent contractors is an important one to make, as any employee misclassification lawyer worth their salt will tell you. Attempting to intentionally pass employees off as contractors in order to avoid payroll taxes and reduce labor costs is more pervasive than you might first assume, so in an effort to help you determine whether the label truly applies, we’ve laid out some important characteristics that distinguish independent contractors from traditional employees.
Independence Is Key
A clue lies right there in the title. As an independent contractor, you’re supposed to maintain a wide degree of latitude in carrying out the duties you’ve agreed to. A client cannot control when, where, and how you do the work, and they, for the most part, are not offering guidance or training on how you do said work.
A misclassification red flag would be if you are being placed on an internal team within an organization, and asked to carry out the same duties as their W-2 employees. As an external agent, you should be completing tasks that an organization does not normally complete in-house.
So, as a contractor, you are allowed to go about the job as you see fit, and, in addition, you should be free to work off-site without established work hours. The client you’re working for only tells you of their specified outcome, and you determine how to achieve that outcome.
You Should Have A Contract
This is another aspect revealed through the title. An independent contractor should have a contract detailing exactly what their client expects from them and what they expect from their client. Said contract should include the particulars of the work, along with compensation details, the time period for completion, termination conditions, etc.
You’re Managing Your Own Business
As an independent contractor, you’re managing your own business details, and this plays into the first point we mentioned earlier. While you aren’t eligible for any of the employee benefits (and you’ll be handling taxes on your own), you also have other rights in conducting your business operations under your own direction.
This means that you can market your services to other clients, and work with more than one client at the same time (so take on all the additional projects you feel comfortable with). What’s more, that means that in carrying out duties, you can also make use of sub-contractors to complete specific tasks. All this should be stated in your contract though, so that all parties know where things stand.