Independent Contractor or Employee?

How do I tell if I am an Independent Contractor or an Employee?

This is a very common question because there is no real definition of “independent contractor.” To tell if you are an employee or an independent contractor there are several factors to consider. The main way to tell if you are an independent contractor or employer, is whether or not your employer or principle, has control over the work you do and the manner in which you do it. An independent contractor for instance, would be given work to do by a employer/principle and would complete the work based on their own schedule, in their own manner, and with their own tools. An employee on the other hand, would be assigned work by an employer/principle, and they would complete the work or task with equipment provided by the employer or principle. An employee would be under supervision of the employer or principle and an independent contractor would not complete the work or task under supervision. Many other factors are also examined in determining if you are an employee or independent contractor. Some of the factors include:

  • Whether the work you are doing is distinct from the work of the employer or principle.
  • Whether the work you are involved in is part of the daily work of the principle or employer.
  • If the principle or employer provides the equipment or tools needed for completing the work or task.
  • If the services you provide require specialized skills.
  • Your opportunity for profit or loss is dependent on your managerial skills
  • How long you provide your services.
  • The permanence of your working relationship with the employer or principle.
  • Method of payment either by time or by job

Whether you and the employer or principle feel they are creating a relationship that determines whether or not you are an employee or independent contractor, however this is determined by law-based tests.
Even if the employer or principle has a lack of supervision and control of your work details, an employer-employee relationship exists if:

  • The employer or principle has general control of your work as a whole.
  • Your responsibilities and duties are a main part of the business operations.
  • Your work does not need detailed control due to its nature.

Whether or not there is a written agreement stating that you are an independent contractor is not determinative. Additionally, whether you are issued a 1099 tax form or a W-2 does not determine if you are an independent contractor or employee.

Example:

Jane is not sure if she is an independent contractor or an employee. Jane is a bookkeeper in an office. Jane’s employer has an agreement stating that she is an independent contractor, yet she works full time in the office of her employer and uses her employer’s computer and other office tools to complete her bookkeeping work. Based on these factors, Jane, by law, is not an independent contractor, but an employee and should be entitled to the benefits allotted to employees, such as overtime and vacation time. Jane my want to file a wage claim in California to retrieve her lost benefits.

Joe is not sure if he is an employee or an independent contractor. Joe provides tech support to a few different small business. The principles or employers at the business will call Joe if they have a tech problem or need Joe to install new programs in the computers or new equipment. Joe uses his own equipment to repair the computers and provides his services. Joe has been providing his services to these companies for a long time and is paid as an independent contractor. Joe uses his own equipment to repair the computers and provides his services. Joe is in fact, an independent contractor and not an employee. If Joe worked as tech support at one company, and had been doing so for a long time, he may be considered an employee and could be entitled to lost benefits such as overtime and vacation pay. Joe may contact an attorney for information about filing a wage-claim in CA.

If you have a question about California employee or independent contractor law or want to file a wage claim in California, contact us now.