The classification of an independent contractor versus a regular employee has been the root of many workplace arguments and lawsuits. After all, employees have the luxury of minimum wage and overtime pay as well as breaks, paid leave, insurance, and other employee benefits. In addition, the workplace laws such a anti-discrimination and workers’ compensation apply to employees, but often do not apply to independent contractors. Thus, your status as a regular employee is key to you receiving the workplace protections and wages to which you are entitled.
Many employers try to game the system so that they can take advantage of working-class people by improperly classifying them as independent contractors. These employers regularly require workers to sign independent contractor agreements to fool these workers into believing that they are legally independent contractors.
The question then is should you sign an independent contractor agreement? Before we answer that question, we must first define who legally qualifies as an independent contractor.
What is an Independent Contractor?
The independent contractor laws vary from state to state. The fact that you have signed an independent contractor agreement does not legally mean you are an independent contractor. Your employer must still legally comply with the wage laws including the independent contractor laws even if you have signed an agreement.
The bottom line is that an independent contractor is a self-employed worker. Thus, the key factor is how much control the company has over how the worker performs the job. The more control the company has, the less likely the worker is legally an independent contractor. An independent contractor renders services to another entity as a non-employee without much supervision, using his or her own tools and/or computer, often away from the employer’s workplace, and for a defined period of time. Independent contractors do not use the employee’s timekeeping system. Also, the employer generally does not directly pay the independent contractor. Instead, the employer pays the company who supposedly employs the independent contractor and that company then pays the contractor. In addition, the employer does not withhold any taxes including Social Security from the independent contractor’s pay. Finally, independent contractor agreements often contain arbitration provisions that waive the right to sue for employment violations including unpaid wages.
What are the Pros and Cons of Being an Independent Contractor?
Working as an independent contractor can have some advantages. Supposedly, independent contractors work on your own time and at your own pace. You can also pursue work that you prefer, and determine which projects you’ll accept or not. Independent contractors can also choose where they work from so many work from home. And, most importantly, unlike employees who have a fixed salary, independent contractors have unlimited earning potential and can work for more than one company at the same time.
However, there are many cons to being an independent contractor. As stated above, the workplace laws do not protect independent contractors like they protect employees. Independent contractors also must pay for all business-related items such as supplies and insurance.
Also, independent contractors are not eligible for employee benefits such as healthcare plans so they must pay for their healthcare out of pocket or go without healthcare. Independent contractors must also pay both the employee and the employer parts of Social Security and Medicare taxes, and they are not qualified for employer-sponsored 401(k) plans or for matching contributions like regular employees.
Know Your Rights
You should contact an employment attorney if a company is forcing you to sign an independent contractor agreement or if you are working under such an agreement, but the company is not paying you all the wage you earn. If you have been improperly classified as a freelancer, you should contact Rowdy Meeks Legal Group LLC, a law firm that has the experience, resources, and track record to help you with your employment concerns. You can visit their website at https://www.rmlegalgroup.com/.