Independent contractors are not treated the same as employees. While independent contractors have more freedom in their work, they also lack some of the protections enjoyed by traditional employees, such as workers' compensation and unemployment benefits. They are also responsible for paying their own taxes directly to the Internal Revenue Service from the first dollar, since their taxes are not withheld by the business that is paying them. If you have a question as to whether you should work as an independent contractor or as an employee, contact an experienced employment law attorney today to discuss your situation.
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Most employment is "at-will." Basically, this means that you could quit or be fired for almost any reason, or even no reason at all. However, there are exceptions to that general rule and employees have many safeguards in place to protect their rights. Under current state and federal laws, employers are not allowed to dismiss an employee for their age, race, sex, pregnancy, national origin, color, union activity or in violation of public policy. If you have been dismissed for one of these reasons, contact the attorneys at Cook, Portune & Logothetis to learn more about your options.
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Independent Contractors
Independent contractors perform compensated work for businesses and individuals, but they are not considered to be employees. This non-employment relationship is based on an oral or written agreement between the business and the independent contractor. This contract may provide specific standards for the work product and establish the pay rate for that work. Businesses that hire independent contractors generally do not withhold federal or state income taxes or Social Security taxes from payments to independent contractors, and they do not maintain unemployment or workers' compensation insurance for those workers. Most independent contractors, therefore, need to make their own quarterly tax payments.
Independent contractors are usually paid by the project, rather than by the hour. Independent contractors have a higher degree of control over the way they work, and they have the ability to contract with a range of businesses. They do not, however, receive many of the legal protections that employees enjoy. If you are a business or a worker involved in or considering an independent contractor arrangement, you should learn the legal consequences. Contact Cook Portune & Logothetis to discuss your situation in Cincinnati, Ohio.
Rights and Duties of Independent Contractors
Businesses that use independent contractors are not their employers; they are closer to being customers of the independent contractors. Independent contractors have the right to determine certain aspects of the project, such as where and how it should be completed. If you are an independent contractor, the business hiring you is not entitled to direct your work process. Generally speaking, your customer specifies the desired outcome of your work, and you have the freedom to determine how to achieve that outcome.
Defining the Independent Contractor
The United States Supreme Court has determined there is no single rule or test for determining whether individuals are employees or independent contractors. Rather, the determination is made by reviewing the overall relationship and who controls it. Among the factors the Court has considered important are:
- The skill required
- The source of the instrumentalities and tools
- The location of the work
- The duration of the relationship between the parties
- Whether the hiring party has the right to assign additional projects to the hired party
- The extent of the hired party's discretion over when and how long to work
- The method of payment
- The hired party's role in hiring and paying assistants
- Whether the work is part of the regular business of the hiring party
- Whether the hiring party is in business
- The provision of employee benefits
- The tax treatment of the hired party
Factors such as the existence of a formal independent contractor agreement or the worker's licensure by the state or local government are not typical determining elements.
Conclusion
In order to determine whether an individual is an employee or an independent contractor, the relationship between the worker and the business must be examined. The degree of control the business has over the worker should be weighed against the degree of independence the worker has from the business. If you have questions on whether your relationship involves independent contractor or employee status, contact an experienced employment law attorney at Cook Portune & Logothetis in Cincinnati, Ohio, to ensure that your rights are protected.
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