Independent Contractors: Workers with(out) Benefits
When a business is able to properly classify workers as independent contractors, rather than employees, that business may be able to reap certain tax-related benefits and limit potential liability. For instance, a business that hires an independent contractor rather than an employee may not be required to pay social security or Medicare taxes, state unemployment insurance or workers compensation insurance or include that worker in the business’s otherwise standard benefits packages.
Further, businesses may be able to push business-related expenses to independent contractors that they would otherwise need to cover where the workers in question are employees.
In addition to those financial benefits, businesses may also be able to limit exposure to potential lawsuits that employees (but not independent contractors) would otherwise be entitled to bring – including suits based on discrimination, wrongful termination, overtime pay and other similar causes of action.