In the modern world, you may not know whether you are an employee or an independent contractor, as this is a complex legal test. However, there are many distinct differences between an independent contractor and an employee – regarding both worker and company obligations.
If your employer incorrectly classified you as an independent contractor, you may have missed out on the benefits that employees might receive, such as healthcare coverage, retirement benefits, wage and hour protections, anti-discrimination protections, and the potential to collect unemployment or workers’ compensation.
Below, we’ll explore the difference between an employee and an independent contractor and the factors that you should analyze. Additionally, we’ll consider what compensation you might deserve if a misclassification as an independent contractor took place, when in fact, the character of your work was in line with that of an employee.
Reach out to a local employment attorney to discuss the options available to you and to maximize any compensation that you might be entitled to.
The Payment Structure Influences Contractor or Employee Status
Generally, employees receive payment as an hourly rate or a salary, while an independent contractor receives a project-based rate. For example, a company needs a 100-page report written about the options available for the competitors on the market.
If a person writes that 100-page report over three weeks, on-site at the company’s premises from 9 a.m. to 5 p.m., and receives a set payment rate per hour, they are likely an employee. This is especially true if they continue working for that company after they finish this report on other projects the company needs help with.
An independent contractor would be a person contracted to write the 100-page report for a set rate, on a set deadline, using their own office and computer. The individual would complete the same 100-page report, but on their own schedule within the confines of the deadline. The obligations of the company are very different between the two options, as well as the rights and protection of the employee.
Control and Supervision Determine Employee or Contractor Status
One of the key features of an employee is that of control, in that they are under the control and supervision of the company employing them. While an employee can still be a manager with control over others, if they are accountable to the company during the time they work, they are an employee.
An independent contractor, by contrast, works on their own schedule, using their own equipment, and for a set rate that is not hourly. If a contractor is fast, they make more per hour, if they are slow, they make less. Employees can receive unemployment, healthcare, and other benefits, however, so the lesser freedom can still be worthwhile.
Take, for example, an electrician – an individual whose job is to repair or build electrical systems for buildings. For an electrician to be an employee, they would be under the control and supervision of their employer and would be using the tools of the employer – and perhaps a company truck – and working on jobs the employer set up.
An employee electrician on a job would generally go to jobs that the company set up, for which the electrician receives an hourly rate. An independent contractor would use their own vehicle, their own tools, and line up and schedule their own customers.
The Owner of the Equipment Impacts the Professional Relationship
Ownership over the equipment needed for the job can also determine whether you are an employee or an independent contractor in some situations. Using the electrician example, the employee uses a company’s tools, while the independent contractor uses their own.
Your Employee Status Affects Your Rights Under Employment Laws
Employee status brings many benefits, but one of the most important is that you receive rights and protections under many different employment laws. No laws will apply that require an employer to pay you a certain minimum amount per hour.
If you were to lose your job, you would then not have the potential to collect unemployment, as your earnings would not get reported as employment. If you experience discrimination, you might have little recourse against the company.
When an employer incorrectly classifies you as an independent contractor and you did not receive a set minimum wage, or you experienced discrimination or harassment on the job, you may seek compensation. If your employer incorrectly classified you, you may also seek additional damages for the employee benefits you should have received while working.
Reaching out to an employment attorney can provide you with an opportunity to explore the details of your employment. If you have a viable case, an employment lawyer will file it for you and fight for the maximum compensation possible.
The Issues of Rideshare Drivers
Uber and other rideshare companies have long faced accusations of misclassifying employees as independent contractors. Both legislative and judicial measures in California ruled in 2020 that rideshare drivers and other gig workers should be employees and receive all the benefits that employees do, including a minimum hourly wage.
However, rideshare company lobbyists are incredibly influential, and despite ongoing efforts to classify rideshare drivers as employees, Proposition 22 passed in November 2020. It stated that Uber and Lyft can continue to treat drivers as independent contractors instead of employees, even if drivers would benefit from employee status.
Connect With an Employment Attorney Today
The facts and circumstances of your situation will determine whether you are an independent contractor or employee and what, if any, compensation you deserve for back pay, missed benefits, and more. A local California employment attorney can help you explore your options and maximize compensation in any case you might have.