Distinguishing between employees and independent contractors

Distinguishing between employees and independent contractors

On Behalf of | Sep 22, 2022 | Employment Law |

The distinction between employees and independent contractors is essential but it is not always well understood. Some of this is because there is no one test under federal law for identifying whether a worker is an employee or an independent contractor.

Misclassification factors

The U.S. Supreme Court has recognized certain factors that, within the totality of the circumstances, can help distinguish between employees and independent contractors.

For example, an employee’s activities are an integral part of the employer’s business. Independent contractors often work for themselves or own their own enterprise.

The relationship between an employee and employer is generally considered permanent, in that it has no defined endpoint. The relationship between an employer and independent contractor generally has an end date, such as the date of the completion of the project.

Employees generally use the employer’s tools, equipment and facilities. An independent contractor usually uses their own tools, equipment and facilities in completing the work.

An employee is generally bound by the employer’s directions and control in how they do their job. Employers mostly do not control how an independent contractor performs their work.

Employees generally do not directly gain from the profits and losses of the business, outside of items such as stock options and potential across the board raises due to increased company success. Independent contractors usually directly absorb the profits and losses from their work.

Employees generally do not have much independent say in the organization and operation of the employer’s business. Independent contractors usually get to decide how their business is run.

These are only guidelines

Note that these are not clear hard-and-fast rules. They are general guidelines courts will consider in misclassification disputes. If you were misclassified as an independent contractor when you should have been classified as an employee, you will want to seek the legal assistance you need to protect your FLSA rights.