In the modern economy, an increasing number of people work as independent contractors. An independent contractor is not an employee of a company. Instead, the contractor provides goods or services on a contractual basis (typically for a set period of time). Consultants and freelance workers are typically independent contractors.
What Are the Rights of Independent Contractors?
Independent contractors enjoy a level of freedom that employees do not have. You schedule your own hours, can accept or reject projects that are offered to you, and decide how you will perform the work. Many workers find this freedom appealing.
Most employment laws (such as overtime and minimum wage protections) do not cover independent contractors. However, you may have legal claims for:
- Certain types of discrimination,
- Injuries that occur at the company,
- Intellectual property, and
- Breach of contract.
Your rights will vary from state to state. An employment lawyer can help you understand your state’s laws.
What Are the Rights of Employers?
As discussed above, most employment laws do not cover independent contractors. And, they typically do not have to offer unemployment benefits or health insurance to contractors. This gives companies more flexibility and reduces operation costs. Additionally, companies can sue an independent contractor if he or she fails to fulfill the terms of the contract.
Why Is It Important to Determine If I'm an Independent Contractor?
Employers sometimes mischaracterize employees as independent contractors in an attempt to avoid state and federal employment and tax laws. Do not assume that you are independent contractor simply because the company says so, or because you receive a 1099 rather than a W2 tax form. You may be losing important benefits and compensation.
What Factors Determine an Independent Contractor?
While the rules vary from state to state, you may be an employee if the company:
- The company sets your work hours,
- You cannot accept or reject projects at will,
- You cannot advertise your services or accept work from other clients,
- The company supplies all your tools and materials, and
- The company controls how you perform the job and production rates.
If you believe your employer has misclassified you as an independent contractor, contact an employment lawyer or a wage and hour agency immediately. You may be entitled to back wages and liquidated damages. And, your employer may face jail time and significant financial penalties.
Should I Consult an Attorney?
Employment law involves a lot of nuance and legal analysis. If you have concerns about your employment status, contact an experienced employment lawyer for help. You may be entitled to compensation and other benefits. And, if you are an employer, a lawyer can help you audit your human resource policies and ensure compliance with state and federal laws.