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What Are My Rights as an Independent Contractor?

By Christopher Coble, Esq. | Last updated on

Maybe it's the "gig economy." Or maybe it's employers trying to avoid paying benefits or taxes. Either way, more and more people are working as independent contractors these days.

While it's great that workers can take advantage of more flexible employment designations, what happens when employers try to take advantage of their independent contractors? Many contractors don't know what they're entitled to when it comes to employment agreements, work decisions, and wage and tax responsibilities.

Right to a Contract

This is less a legal right and more like a really, really good idea. You want your client to know exactly what to expect from you, and exactly what you expect from the client.

Just like a standard employment contract, a formal independent contractor agreement, including the parameters of the project and the time or method of compensation. A concise agreement can keep everyone on the same page in terms of productivity and payment.

While you have a right to create a work contract, you may not have the right to work. Unfortunately, most employment discrimination laws don't apply to independent contractors, and businesses are free to hire or refuse to hire independent contractors as they see fit.

Right to Work Decisions

It may be difficult to conceptualize, but as an independent contractor, you're the boss. The person or company paying you isn't your employer, but more your client.

Therefore, independent contractors have the right to decide when, where, and how a given project should be completed. If you are an independent contractor, the persons or businesses hiring you are not entitled to direct your work. If they do so, that makes them employers, and you an employee.

While your customer may specify the desired outcome of your work, you have the freedom and the right to determine how to achieve that outcome.

Right to Be Paid

Just because you're not technically an employee doesn't mean you can't get paid. And just because your clients don't have to adhere to certain tax requirements doesn't mean they can skirt certain wage and hour laws.

What it does mean, however, is that your payment will be determined by your contracting agreement. Make sure your agreement specifically details how, when, and how much you will be compensated, and make sure your client follows the agreement.

Right to Know Where You Stand

Often, an employer will misclassify an employee as an independent contractor to avoid paying payroll taxes. While the IRS is cracking down on employers, it may be up to you to determine whether you're an independent contractor or an employee.

The Internal Revenue Service and the Department of Labor have their own considerations when determining whether someone is an employee or an independent contractor, but here are some general factors:

  • Number of Clients: A contractor can have many clients while an employee has one employer;
  • Location of Job: A contractor can work anywhere, including a home office, while an employee generally works at one place of business;
  • Training for Project: A contractor brings his or her own expertise and supplies to complete a project, while an employee is generally trained by the employer and has furnished by the employer; and
  • Control of Work: A contractor works independently, set his or her own hours, and has the authority to decide how to go about accomplishing tasks, while an employee works at his or her employer's direction.

Make sure an employer isn't calling you an independent contractor when you're really an employee.

Duty to Pay Taxes

As noted above, some employers hire independent contractors to avoid paying taxes. This means the tax burden is on the independent contractor.

Because your federal and state income taxes aren't immediately deducted from your paycheck as an independent contractor, you should be paying estimated taxes. While you could always wait until April 15 to pay, it's normally a better practice to pay as you go, so you don't owe a large lump sum all at once.

If you've signed a contracting agreement with a client and they fail to adhere to its terms, you can file a breach of contract claim. Depending on the amount owed or the other damages, you may have to take your case to small claims court or try and settle it through mediation.

If you think an employer has misclassified you as an independent contractor when you're really an employee, or has otherwise denied you wages or benefits to which you are entitled, you can report it to the Department of Labor.

If you'd like legal assistance with an employment or independent contractor issue, you can also contact an experienced employment law attorney near you.

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