What Is an Independent Contractor?
Independent contractors have different obligations and rights to employees because they are running their own business. This means it’s important to understand the difference between the two. There are a number of things that can help you tell the difference between an employee and a contractor. There isn’t one that makes a difference on its own – you need to consider everything together.
They hired a contractor to remodel the kitchen. Recent examples on the web include people in those roles who are employees, whereas most other instacart workers, called full-service shoppers. While flight disruptions around the world are hitting pilots globally, the problems are especially acute for foreign pilots in China, many of whom are contractors without union protection, common for pilots in major markets including the u. S.
An independent contractor is a person or entity contracted to perform work for—or provide services to—another entity as a nonemployee. As a result, independent contractors must pay their own social security and medicare taxes. The payer must correctly classify each payee as either an independent contractor or employee. Another term for an independent contractor is a freelancer.
A contractor, also known as an independent contractor , provides his or her services to an outside organization. Contractors are usually hired for a predetermined amount of time and at an established hourly or daily rate. Typically, a contractor is hired for a short-term project and is assigned a specific task to complete. Contractors are expected to work independently and maintain strong self-management skills.
When we released our guidance document regarding the definition of employment in 2015, the employer defense bar — law firms that specialize in defending employers in lawsuits brought by individuals, class actions, and the government — not surprisingly expressed concern over its impact, given the prevalence of the practice. However, the guidance received an unanticipated level of attention from companies operating in the digital world. In particular, many reporters as well as people in the industry read it as direct response to litigation underway in many places across the country by uber drivers who asserted that they had been misclassified as independent contractors. As i have often noted in interviews , our guidance was focused on the millions of workers who were potentially misclassified as independent contractors in the fissured workplace, and not merely the less than 1% of workers operating in the digitally enabled gig economy.
People such as doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers, or auctioneers who are in an independent trade, business, or profession in which they offer their services to the general public are generally independent contractors. However, whether these people are independent contractors or employees depends on the facts in each case. The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. The earnings of a person who is working as an independent contractor are subject to self-employment tax.