While you have autonomy and freedom as an independent contractor, you may also encounter some challenges, such as: Independent contractors are not considered ”employees” under the Fair Labour Standards Act and are therefore not covered by wage and hourly regulations. In general, the salaries of an independent contractor are determined according to his contract with the employer. These contracts often set a deadline for completion of the work, but do not include the fixed hours during which the contractor must work on the employer`s construction site. This flexibility is one of the characteristics of an independent contractor relationship. This issue briefly examines how independent contractors are defined by law and understood by economists, and shows why it is rarely good for most workers to be forced to work as independent contractors due to lack of good wages, lack of basic benefits, and lack of independence from working hours. Classifying an employee as an independent contractor should always be an informed and bona fide business decision, not a pretext to circumvent the employer`s obligations to employees. Misclassifying a person as an independent contractor can result in various liabilities. See Misclassification of Independent Contractors Can Be Corrected. Independent contractors deliver goods or services under the terms of a contract they have negotiated with an employer. Independent contractors are not employees and therefore do not fall under most federal labour laws. They are not protected against discrimination in the workplace by Title VII, nor are they entitled to leave under the Family Medical Leave Act.
Employers are not required to pay overtime to independent contractors under the Fair Labour Standards Act or to accommodate a contractor`s disabilities under the Americans with Disabilities Act. An employer is also not responsible for the unemployment or workers` compensation benefits of an independent contractor and is not required to provide a pension or other employment benefits to an independent contractor. In addition, an employer does not have to pay labour tax for an independent contractor. High-income workers enter self-employment in very different circumstances than low-wage workers, leading to different outcomes in terms of income, benefits and flexible working time. Professionals can really act as entrepreneurs and significantly improve their income while maintaining greater freedom of work. U.S. labor laws are designed to allow these types of professionals to declare themselves self-employed. In contrast, low-wage workers are more likely to be deprived of wages and benefits if they become independent contractors, with little or no corresponding increase in autonomy. An independent contractor from 1099 should benefit from any tax relief granted to him that employees do not receive. The history of labor in the United States has been marked for more than a century by disputes between workers, employers, and government over workers` rights to wages and benefits.
With the development of new technologies and new business models in the future of work, these struggles will change and politics must keep pace. The federal government and other states should follow the example of the California Supreme Court and recognize the fundamental power imbalance between entrepreneurs and businesses. Strict rules on who can qualify as an independent contractor would restore the wages and benefits of low-ranking workers or give them real freedom to engage in entrepreneurial activities. In most cases, entrepreneurs are not eligible for government unemployment benefits because they are self-employed and have to fund their retirement accounts. Health and liability insurance rates for the self-employed are generally higher than the group rates that employers can get for their employees. Some customers may ask you to take out liability insurance. As an independent contractor, you have the right to ask a state or federal agency to review your employment status. If you think you might be an employee and have a problem with your employer regarding your salary or hours of work, click here. If you are discriminated against and would like to know if you are an employee under the Americans with Disabilities Act or Title VII, please contact the nearest EEOC office. Independent contractor: Can an employer dismiss and reinstate an employee as an independent contractor who does the same work? Here are some examples of occupations that often work as independent contractors: Employers are required to withhold income tax based on information provided by employees on IRS Form W-4. If an employer fails to withhold income taxes on behalf of an employee who was wrongly classified as an independent contractor and the person failed to pay the taxes, the employer may be held liable for federal or state taxes that had to be withheld but were not. Basically, employee freedom is not something that companies can only give to independent contractors.
Nothing prevents SuperShuttle, Uber or any other company from offering workers both employee status and protection and a flexible schedule. Tax season can be complicated for independent contractors. In most cases, you are a 1099 independent contractor. This means that at the end of the year, your clients will give you a 1099 Misc document showing your annual income and remuneration. Unlike traditional employment, you are responsible for paying your own taxes and need to understand your company`s tax obligations. Fortunately, you can avoid tax problems at the end of the year by following a few simple tips. It`s hard to pay your taxes as an independent contractor, so before you decide to do all the work yourself, contact a tax professional. These people are trained to deal with the tax issues and deductions faced by independent contractors. Being self-employed and managing your own taxes has many advantages.
The most important thing is that you can deduct your business expenses from your taxes. While this is something any business can do, independent contractors get an advantage. You can deduct from your taxes home office expenses, internet and phone bills, travel expenses, and even meals. So even if you don`t have a paid vacation like full-time employees, you may be able to save money by traveling as long as you manage to tie the expenses to your business. You`ll be on a honor system when you declare most of your franchises, but you should be prepared to defend your decisions in the event of an irs audit. Independent contractor: Are there any guidelines for employers to manage the relationship with an independent contractor? FRAUD. According to DOL Fact Sheet 13: Employment under the Fair Labor Standards Act, ”The U.S. Supreme Court has repeatedly emphasized that there is no single rule or criterion for determining whether a person is an independent contractor or an employee for the purposes of the RSA. The Court has held that it is the whole activity or situation that controls it. The following factors were considered essential in determining the classification of independent contractors: tangible discoveries and inventions, on the other hand, are subject to patent law. Under patent law, the rights to the object belong to the original creator and are therefore generally held by the employee or independent contractor. As in the Copyright Act, an employer may take control of these rights if there is an assignment provision in the employment contract or in the contract of an independent contractor.
With that in mind, an independent entrepreneur can be an incredible stepping stone to starting a regular business. For this reason, many potential small business owners choose to become independent entrepreneurs before starting their business. A recent study by the U.S. Bureau of Labor Statistics and academic research by Lawrence Katz of Harvard University and the late Alan Krueger of Princeton University show that between 6.9 percent and 9.6 percent of all workers are independent contractors, or 10.5 million to 15 million workers. Starting your own business as an independent contractor requires an investment of time and energy, but the risk can pay off. For those with a creative and entrepreneurial mind, the rewards will be more than just monetary. Suddenly, when you become an independent contractor, all the things that have been done for you – like administration, accounting and marketing – are now under your responsibility. Fortunately, there are tools that help reduce the workload. You need the following: Despite these limitations, joining a union as an independent contractor can bring many useful benefits and resources. The local can help you get health and equipment insurance, advise you contractually and help you find and secure jobs.
The union can also fight for your legislative interests and offer educational programs. .
