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Independent Contractor or Employee? Are there differences?


There are distinct differences between independent contractors or freelancers and employees. Some of the differences are obvious but some are more subtle. In short, being an independent contractor essentially means that you are in business for yourself, serving a clientele whereas when you are classified as an employee you are working for one entity and under its supervision and control.

The practice of misclassifying employees allows employers to avoid paying unemployment and other taxes on workers and from covering them on workers compensation and unemployment insurance. Employees who are misclassified are often denied access to critical protections they are entitled to by law such as minimum wage, overtime compensation, paid sick leave and family and medical leave laws.

The United States Supreme Court has ruled that there is no single rule or test for determining whether an individual is an independent contractor or an employee for purposes of the Fair Labor Standards Act, the federal wage and hour law. Among the factors which the Court has considered are:

  1. The extent to which the services rendered are an integral part of the principal's business.
  2. The permanency of the relationship.
  3. The amount of the alleged contractor's investment in facilities and equipment.
  4. The nature and degree of control by the principal.
  5. The alleged contractor's opportunities for profit and loss.
  6. The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor.
  7. The degree of independent business organization and operation.

One of the most common industries where misclassification occurs is in the construction industry where contractors hire so-called independent contractors. These individuals, in reality, should likely be considered employees because they do not meet the tests for independence, as stated above. A situation involving a person volunteering his or her services for another may also result in an employment relationship. For example, a person who is an employee cannot "volunteer" his/her services to the employer to perform the same type service performed as an employee. Of course, individuals may volunteer or donate their services to religious, public service, and non-profit organizations, without contemplation of pay, and not be considered employees of such organization. Trainees or students may also be employees, depending on the circumstances of their activities for the employer. People who perform work at their own home are often improperly considered as independent contractors. Wage and hour laws cover such homeworkers as employees and they are entitled to all benefits of the law.

There are numerous reasons why individuals opt for freelancing or working as an independent contractor. Some simply want the freedom that is inherently part of that relationship. The ability to set your own schedule and come and go as you please may be necessary in order to permit the individual to take the position. On the other hand, an “independent contractor” relationship may be forced upon you for the wrong reasons. If that is the case the employment attorneys at Schwartz Perry & Heller may be able to help and assist you in obtaining the benefits and protection to which you are entitled under the law.

Employment Law Firm in New York

At Schwartz Perry & Heller LLP in New York, our skilled and knowledgeable attorneys are dedicated to standing up for the rights of workers facing employment discrimination. If you are the victim of illegal workplace discrimination, you can rely on us to protect your rights. Backed by over 110 years of combined legal experience and a track record of success, our team is exceptionally equipped to handle a vast array of matters related to employment law.

Do not allow your employer to take advantage of you and, instead, place your trust in a law firm that will passionately advocate for your rights.

Get started on your employment law case today and reach out to us at (646) 490-0221 to schedule a consultation to discuss your case and learn more about how we can assist you.

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