All Collections
Employee vs Independent Contractor- United States
Employee vs Independent Contractor- United States
Updated over a week ago

Employee vs Independent Contractor- United States

When deciding between hiring an employee or engaging an independent contractor, organizations should consider several factors to ensure compliance with applicable labor laws to make the appropriate classification. Making the proper classification at the onset of the relationship will determine applicable laws and standards that must be followed between both parties.

Here are some key factors to review:

Control: Assess the level of control the employer exercises over the worker. Employees typically have more direction and supervision from the employer, while independent contractors have more autonomy and control over how they perform their work. Employees may be required to wear a specific uniform whereas an independent contractor would not.

Relationship type: Determine the nature of the relationship. Employees generally have a long-term commitment to the employer, while independent contractors typically work on a project basis or for a specific duration.

Work arrangement: Evaluate the work arrangement. Employees often work exclusively for one employer and are integrated into the company's operations, while independent contractors may work for multiple clients and maintain their own business operations. Employees typically work an employer defined schedule where independent contractors have much more control over their specific working times.

Financial aspects: Consider the financial arrangement. Employees usually receive a regular salary or wages, employee benefits, and have taxes withheld by the employer. Independent contractors are typically paid a fee or project-based compensation and are responsible for their own taxes and benefits.

Skill-set: Assess the worker's expertise and specialization. Employees often receive training and guidance from the employer, while independent contractors are expected to possess specialized skills and perform work based on their own expertise.

Tools and equipment: Consider who provides the necessary tools and equipment for the job. Employees typically receive equipment and resources from the employer, while independent contractors usually use their own tools.

Risk and liability: Evaluate the allocation of risk and liability. Employees are generally protected by employment laws and workers' compensation, while independent contractors often assume more risk and liability for their work.

It's important to note that classification criteria may vary depending on the jurisdiction and specific laws governing employment. It's advisable to consult with legal or HR professionals to ensure compliance with applicable laws and regulations.

Did this answer your question?