Employee or Contractor: Which One Are You Really?

 

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Freshbooks shares its view on how control determines the difference between an employee and independent contractor.

Employee or Contractor? The Difference Is All About Control

Whether you’re an independent contractor or an employee, it’s determined by how much control your employer has over your schedule and work.

If your client defines exactly how a job must be done (when, where and how to do the job), then the worker should probably be classified as an employee.

Many people incorrectly think that if they’re hiring someone for a short period of time or on a part-time basis, then they’re hiring a contractor. But the contractor/employee classification isn’t determined by the length of the working relationship. So, just because you’re hired for a three-month gig, it doesn’t necessarily mean you’re a contractor. You need to look at all the other factors too.

In the U.S., you can read all about the distinctions between contractors and employees from the Small Business Association and the Equal Employment Opportunity Commission (EEOC). Here’s a high-level summary:

A contractor typically:

  • Operates under a business name
  • May have his/her own sub-contractors or employees
  • Invoices for projects and defines how to invoice/be paid
  • Has multiple clients
  • Advertises for his or her services
  • Sets his or her own schedule
  • Chooses his or her clients and projects
  • Has his/her own tools to perform the work

An employee typically:

  • Does the work as defined by the employer (schedule, workplace, and working process are all defined by the employer)
  • Is trained by the employer on how to do the job
  • Works for only one employer

So Are You a Contractor or an Employee?

 If you’re wondering if you should be considered an independent contractor or an employee, ask yourself the following questions:

  • Who is setting the hours? A client can tell you the final deadline for a project or milestone. But, if the client is telling you that you need to come into the office tomorrow from 9 to 5, then maybe you should be considered an employee.
  • Who is defining how the work gets done? A client typically gives a freelancer or contractor high-level instructions on the project or job. Then, the freelancer will use his/her best judgment to pick the tools, process, and schedule to get that project done. There should be little micro-managing.
  • How reasonable are the deadlines? Are you able to work with other clients? We’ve all had tight deadlines or been hired at the last minute to pitch in for an urgent need. These aren’t necessarily red flags. But, if you’re engaged in a long-term contract and continually have such tight deadlines and large amounts of work that you can’t possibly work for another client (or advertise your services to find another client), then this could indicate that you should be classified as an employee. Remember that an independent contractor should be able to work with multiple clients at the same time.

 Keep in mind that classification is a rather grey area. There’s no single factor that will identify a worker as an employee or independent contractor. Rather, status should be determined by adding up a number of factors in the client-worker relationship.

Read the full story at Employee or Contractor: Which One Are You Really?

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