Contract employees and contract workers are those laborers who are not considered regular employees of a business company. They may be hired on a part-time or short-term basis, usually to complete a specific task (such as constructing company property). They may not be included in the company’s regular payroll and may operate very independently of the company’s normal business functions.
Contract employee and contract worker laws generally involve both employment and contract principles. This is because the worker is usually operating under a formal contract with the employee. This is usually a different type of contract from an employment contract (for hiring), and may only cover the specific details of the project to be accomplished.
In order to avoid confusion, it’s best to specifically state in the contract whether the worker is going to be listed as a regular employee or a contract worker. It should also mention whether the worker is entitled to benefits or not. Contract workers are sometimes called “independent contractors”.
One of the main factors when determining whether a laborer is considered a regular employee or a contract employee is the degree of control that the company has over their work project. Generally, employers have a great degree of control over regular employees, including the number of hours worked, pay rates, and benefits offered.
In comparison, independent contract employees and contract workers often exercise much control over their own work. They may perform some or most of their work outside of the business premises, and may have control over:
- The pace at which the work proceeds (though they must usually finish by a certain deadline)
- The details of how the work is accomplished, and securing the materials needed to complete the project
Thus, if the employer is able to control these details, the employee may be closer to a regular employee. However, if it’s the worker who is controlling such decisions without supervision, they may be considered an independent contract worker.
Some other factors to consider when categorizing the worker may include:
- How regular the business is between the employer and the worker
- Whether the contract workers is using separate advertising, licensing, and production capabilities
- Whether the employer will be supplying tools or equipment for the contract employee
- Whether the worker will shoulder losses rather than the employer
Thus, each employment arrangement may be different depending on the circumstances. In the event of a dispute over regular employee benefits, the court may have to examine each claim on a case-by-case basis to determine whether the employee is a regular worker or a contract worker.
The difference between regular employees versus independent contractors is often very great. It’s important to be able to distinguish the difference between a regular employee and a contract employee or contract worker. For instance, if there is a dispute between the worker and the employer, they may be entitled to certain legal remedies if they are a regular employee. However, if they’re classified as a contract worker, they may not be able to claim certain benefits or remedies.
Some differences between regular employees and contract workers may include:
- Contract employees usually pay their own taxes on the project (no payroll deductions), and may pay their own social security costs; these are usually covered for regular employees
- The contract employee is usually not entitled to worker’s comp, retirement, or health insurance, whereas a regular employee is entitled to such benefits
- Contract workers may be paid in amount agreed upon in a contract, either in lump sum or installments; regular employees are usually paid based on salary, hourly wages, or commission.
Disputes over contract terms can often result in a monetary damages award for the non-breaching party. For instance, if the contract employee is denied payment for their work, the employer may be required to reimburse them for expenses, including the costs for the project as well as possible lost profits due to the breach.
Contract employee and contract worker laws can vary widely from state to state. Each individual contract employment arrangement may be different; thus, it may be necessary to hire an contract lawyer for help with contract employment issues. Your attorney will be able to assist you in reviewing any contracts, and can help you negotiate for the most beneficial terms. Also, if you need to file a legal claim, your attorney can help you in preparation for the lawsuit, and also during the actual legal proceedings.