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The differences between independent contractors and employees

On Behalf of | Oct 8, 2019 | Employment Litigation

Any time someone goes to work for a company in Florida, the relationship between the worker and the employer needs to be clearly defined.

According to Chron.com, misclassifying a worker could lead to legal trouble for the employer.

Identifying employees

When a company hires an employee, a supervisor usually gives the worker the tools he or she needs to do the job and the instructions on how to do it, sets the schedule that the employee will work and pays him or her on paydays that are usually set in advance.

The employer must withhold taxes from the employee’s paycheck and provide a W-2 form so that the employee can report the income to the IRS. The employer may also provide benefits for the employee such as health insurance, paid vacation and sick leave.

Identifying independent contractors

Although independent contractors provide services for the company, they are self-employed. They will typically do the work using their own tools, set their own schedule and submit an invoice to receive payment. They are usually specialists in their field and do the work according to their own expertise rather than the company’s methods.

Independent contractors receive a 1099 form from the company that shows their earnings so they can use that information to pay self-employment tax.

Avoiding legal issues

Misclassifying employees as independent contractors may violate federal wage and hour laws as well as tax laws, according to Forbes. This could lead to organizational audits, lawsuits and IRS penalties. Having separate policies and procedures for employees and independent contractors may help to ensure that misclassification does not occur.