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Employees and independent contractors are both important members of our workforce, filling jobs necessary to keep our economy and culture moving forward. But, for many, the idea of being an independent contractor is new. Whether it’s because of a career loss or change during the pandemic or overall desire for something new, becoming an independent contractor is a great option for those who want a little more freedom with their work.
When it comes to your rights, it’s important to know which category you fall into. Let’s look at some of the differences.
Employees are paid an hourly rate or salary through a consistent payroll source. This means, barring unforeseen changes, you can count on waking up every week or every few weeks at the same time to the same or similar amounts hitting your bank account.
With that paycheck, also comes withholdings like income tax, healthcare, and Social Security. Those are all tied to work as an employee, and your job may include other withholdings.
Employers are also required to provide you with a W-2 Form that lists your income and deductions for you to file your yearly taxes.
Overall, life as an employee is consistent and you will have one employer to report to (even if you work for several clients).
Independent contractors
This is where things become less than consistent. Your payment can come in a number of forms and over a number of timelines. You may get paid partially or in full upfront or even not at all until your project is completed. You have the power to establish your own payment structure based on the task you’re completing for a person or company. The key here is a willingness to be flexible if a job you take on isn’t willing to fulfill your requests.
Independent contractors’ pay will generally not have ANY withholdings. This can give you spending freedom in the immediate term but keep in mind the lack of income tax withholdings mean you will pay it on total revenue later on. Also, be sure you retain any necessary insurance policies based on local and federal requirements.
Independent contractors do NOT receive a W-2. Instead, you will receive a 1099 Form from any work that paid you more than $600. This should include all your necessary information from each job to file your taxes.
Feel Like Your Employment Agreement Has Been Violated?
At Capshaw & Associates, we know your work is important and want to make sure you’re getting all the pay and benefits you earned. If you feel like your rights are being violated as a contractor, let our decades of legal experience work for you. Contact Capshaw & Associates today and get your case started!