Legal View: Employees vs. Independent Contractors

Legal Views

ScalesYou’ve been working harder than ever to make your small business successful.  And it has paid off!  You have more orders than you know what to do with and you’re running yourself ragged.  You’re working at the crack of dawn and you don’t stop until the stars are out.  Work is stressful, you need help and luckily, with all of the success you are experiencing, you can afford to hire someone!  Read below to learn about the two most common types of employees and contractors you can hire!

Independent Contractors

An independent contractor is a person or business entity that provides goods or services to another business entity under the terms of a specified contract or per the terms of a verbal agreement.  Independent contractors are free-lancers.  The company or person they are working for defines the job that the contractor is paid to perform, but the contractor, individually, has the autonomy to decide how to complete the job.  An independent contractor is responsible for their own tax withholding procedures and the hiring person or business entity does not have the same tax and insurance obligations towards the contactor as they would towards an employee (i.e. workers compensation, unemployment, etc).

Employees

An employee is a person employed for wages or salary.  The employer defines the terms of employment and  can control how the employee performs the tasks associated with the position.  Employees can be employed to work either full- or part-time.  Employers are usually required to pay workers compensation & unemployment insurance and withhold taxes as per the employee’s requested withholding.  Unless expressly stated otherwise in an employment contract, employees work on an At-Will basis, which means that the employee may quit or the employer may fire the employee with no notice and no explanation required.

For more information on state and federal regulations regarding employees and independent contractors, contact an attorney in your area.

[DISCLAIMER: This article does NOT contain legal advice and NO attorney-client relationship arises from reading it.  Always contact an attorney in your jurisdiction to learn about laws applicable to you.]

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