If you’re working in the state of California, you’re either an independent contractor or an employee – but what’s the difference, and how do you know which you are?
Contractor vs. Employee: What Are the Differences?
In many cases, independent contractors and employees work side-by-side with no apparent differences between them. However, there are a few important distinctions and each has its own definition.
Contractor: A person or company that undertakes a contract to provide materials or labor to perform a service or do a job
Employee: A person employed for wages or salary
The legal definitions are more complex than these definitions are, but they give you a good rule of thumb to determine the major differences between the two.
Improper Classification of Contractors and Employees
Your employment status, whether you’re an independent contractor or an employee, affects your benefits, your taxes, and how much liability you carry. When employers get it wrong, either accidentally or purposefully, contractors and employees suffer.
What Some Employers Do
In some cases, official job titles don’t match legal classifications. The employer is supposed to make the appropriate – and legal – adjustments, but that doesn’t always happen. Some employers change job titles to go around the law, though, and that’s when things go wrong.
Contractor vs. Employee Chart
You can use this chart to help determine whether you should be classified as an employee or a contractor.
|Can work for more than one company at a time||Typically only works for one employer|
|Sets own hours||Works at times and for durations set by the employer|
|Works from any location||Generally works in the employer’s place of business|
|Does not receive employment benefits, such as health insurance, sick pay or overtime pay||Is eligible for employment benefits, such as health insurance, sick pay and overtime pay|
|Works independently often or most of the time||Works under the employer’s control|
|Can perform tasks in any manner, without the employer’s input or direction||Is subject to the employer’s guidelines on performing tasks|
|Bears costs associated with performing the job||Does not incur costs or make personal investments associated with performing the job|
|Pays own taxes; employer does not withhold taxes||Employer withholds taxes and provides employee with a net salary|
|Cannot claim unemployment compensation benefits||Is generally eligible for unemployment compensation benefits if terminated or laid off|
|Cannot claim worker’s compensation benefits||Can claim worker’s compensation benefits|
|Can be “let go” without reason or notice||Can usually only be terminated for good cause and with notice, unless employment is of another nature|
|Receives pay according to a contract’s terms and conditions||Receives at least federal or state minimum wage, and is covered by employment laws like overtime pay|
|Is not typically protected by employment laws involving discrimination or workplace safety||Is protected by employment laws involving discrimination and workplace safety laws|
What if Your Employer Characterized Your Job the Wrong Way?
Maybe you should’ve been classified as an employee, not a contractor, so you’re entitled to benefits and other compensation, or maybe your situation is entirely different.
In any case, if your employer mischaracterized the nature of your employment (contractor vs. employee), you may have legal recourse – and you could be entitled to financial compensation to make up for what you missed out on due to the mischaracterization.
If you suspect that’s happened to you, call our Glendale employment lawyers right away at 818-659-8331 or 800-774-4163 for a free employment classification consultation. We may be able to help you get the compensation you deserve.