If you are in the process of looking for a job, and are being asked to work as an independent contractor, it is important to understand your responsibilities if you agree to work as an independent contractor. Independent contractors are not considered employees. Because of this, independent contractors may not enjoy benefits like medical insurance or dental insurance. They also may not enjoy the benefits of being protected by worker’s compensation. Finally, because independent contractors are considered self-employed, it is the responsibility of independent contractors to pay their own Social Security and Medicare taxes. Your tax burden as an independent contractor can be higher than the taxes you would pay as an employee. Furthermore, when you are an independent contractor, you won’t have your employer removing taxes from your pay check. This means that you’ll need to plan ahead for paying taxes and may be required to pay estimated taxes to the IRS on a quarterly basis.
There are many types of jobs where individuals may be more likely to be independent contractors or freelancers. This includes jobs like subcontractors, freelance writers, software designers, actors, musicians, doctors, dentists, veterinarians, and accountants. However, there are many other types of jobs where workers typically are employees and should be designated as such. In jobs like the oilfield industry, some employers have abused the independent contractor distinction to save money and avoid having to pay benefits to workers who should have been classified as employees.
While many independent contractors prefer the arrangement because it allows them to run their own business, work for multiple clients or companies, manage their own time, and work from anywhere, other workers are seeking an employee-employer relationship and may find themselves surprised to learn that what they thought was an employee-employer relationship was really an independent contractor relationship. Sometimes employers may abuse the independent contractor distinction, wrongfully naming employees independent contractors. When this happens, employees can suffer because they lose out on important benefits, like medical and dental benefits, worker’s compensation benefits, and they may have to pay more in taxes. Another consequence of being labelled an independent contractor versus an employee is that independent contractors are not entitled to receive overtime pay while employees are entitled to receive overtime pay. An improper classification of an employee as an independent contractor can result in unpaid wages, particularly unpaid overtime.
If you believe you may have been misclassified as an independent contractor when you expected to be an employee, you may have certain rights under the law. Moore & Associates are wage violations employment lawyers in Houston, Texas who may be able to help you fight to be properly classified and may even be able to help you receive unpaid benefits or unpaid wages or damages for losses that resulted from the improper classification. Our firm can take the time to review your situation and help you understand your options and rights under the law.
What is the Difference Between an Employee and an Independent Contractor?
The difference between an employee and an independent contractor can sometimes be subtle. How can you tell if you should be classified as an employee? The IRS sets some standards based on whether a person can be considered an employee or an independent contractor. As a general rule, the IRS will assume a worker is an employee unless the relationship as a contractor has been established. The IRS sets three major guidelines when determining whether you are an employee:
- If you work at an office or a specific job site designated by the person for whom you are working, are provided with tools, and are given specific instructions about how a job is to be done, you are more likely to be classified as an employee than an independent contractor. If you are given regular training and are evaluated on your work, you may also be more likely to be considered an employee. If you received training, receive equipment, have to show up to a job site, and are evaluated regularly for your work and are classified as an independent contractor, you may want to speak to your employer about why you are not being considered an employee.
- Generally, an independent contractor can set their own wages. They are generally not paid on a regular basis and must submit invoices to receive payment. Independent contractors must often pay for their own materials and can suffer profits and losses from their business.
- Generally, if you are an independent contractor, there is a contract governing the relationship. However, just signing a contract doesn’t mean you should be classified as an independent contractor. If you receive benefits, such as medical or dental benefits, you might be considered an employee, not an independent contractor.
If you have been classified an independent contractor and have questions about whether this classification is correct, consider speaking to Moore & Associates, employment lawyers who specialize in unpaid wage violations in Houston, Texas. If you have been improperly classified as an independent contractor, your employer may be liable for paying your employment taxes and for paying unpaid overtime. Contact our law firm today to learn more about your rights and to fight back if you have been misclassified.
Protect Your Rights
As the oilfield industry and other businesses try to cut costs, many workers have discovered that they were misclassified as independent contractors when they should have been considered employees. Because workers are versed in employment law, they may follow the guidance of their employer and may later find themselves facing a high tax bill, unpaid wages, or find themselves shocked to learn that they are not employees. If you are uncertain about what status you should have, consider speaking to Moore & Associates, unpaid wages attorneys. Our firm may be able to help you fight for unpaid vacation time, unpaid wages, and unpaid overtime you may be entitled to receive. Contact our firm today to learn more.