While working as an independent contractor may not offer the same benefits as working as an employee, there are plenty of advantages it does offer such as the ability to set your own hours and, in a way, work as your own boss.
Hiring independent contractors offers plenty of advantages to businesses as well. However, it’s when businesses try to achieve the “best of both worlds” by treating their independent contractors as employees that problems arise.
Defining an independent contractor in California
In an attempt to remove some of the ambiguity surrounding the difference between an independent contractor and an employee, the IRS has established a checklist of 20 points that define an independent contractor. Keep in mind that not all of these points must be met, and there is some degree of discretion on behalf of both the employer and the contractor in determining how much significance is given to each point. The IRS checklist for defining an independent contractor is:
- Does the worker stand to make a profit or a loss on the work they deliver?
- Has the worker invested their own funds into the equipment or facilities necessary to complete the work?
- Does the worker perform services for more than one client?
- Does the worker offer their services to the general public?
- Does the business have the right to give the worker specific instructions about when and how the work is completed?
- Has the business provided training to the worker?
- Are the worker’s services essential to the continued operation of the business?
- Does the business hire and pay for assistants and/or staff for the worker?
- Does the business require a worker’s services be completed by them, or are they free to delegate tasks to other parties?
- Is the worker free to set their own hours, or are hours set by the business?
- Is there a long-term, ongoing relationship between the business and the worker?
- Is the work performed on the premise of the business or can it be performed remotely?
- Does the business have the right to determine the order in which the work is completed?
- Is the worker required to submit reports detailing the work they complete?
- Is the worker paid an hourly wage or a salary as opposed to being paid by the project?
- Does the business reimburse the worker for travel or other job-related expenses?
- Does the business provide tools/material for the worker to use?
- Is the business free to fire the worker at any time?
- Is the worker required to work full-time for the business?
- Does the worker limit the availability of their services to the general public?
Whether or not you qualify as an employee or an independent contractor depends on the answer to these questions as well as other important factors such as whether an independent contractor agreement is in place.
What happens, though, when you are working as an independent contractor and are being treated like an employee?
Treating independent contractors like employees
Sometimes, businesses will cross the line in regards to what they ask of their independent contractors, requiring them to fill the role of an employee without offering them any of the benefits that employees typically receive.
For example, if an independent contractor finds themselves having to work full-time at set hours on-location for an extended period of time, chances are they no longer qualify as an independent contractor and must be treated as an employee under California law.
If you have an independent contractor agreement in place and yet find yourself filling the role of an employee, we urge you to contact us today. There are steps that can be taken to ensure that you receive the benefits and compensation that you deserve.