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Employee or Independent Contractor: What’s the Difference and How Do You Know?

Traditionally, a company would arrange to have most of the services needed to run the business performed in-house, meaning necessary services would be provided by employees of the company. However, over the past several decades, the use of independent contractors has skyrocketed. Thus, while independent contractors were historically only found in specific fields, such as construction, photography, and consulting, more industries are hiring independent contractors, including technology companies, law offices, marketing firms, and even medical offices.

As a general definition, an independent contractor is someone who performs work for a company but is not an employee of the company. The definition of an independent contractor can depend on the state in which the company operates. However, in general, the focus of the inquiry is on the amount of control the company retains over the work product and individual performing the work. The more control an employer exercises in how the work is completed, the more likely the worker will be considered an employee. In Texas, the Department of Workforce Services uses a twenty-point comparative approach to determine whether a worker is an employee or an independent contractor. The IRS uses a somewhat similar approach, called the “control test,” which focuses primarily on the amount of control the company retains over the assigned work.

It is essential for a worker to understand his or her relationship with a company and what rights you have. Just because a company labels you as an independent contractor does not make it so; the ultimate determination will be left to the courts.

Employees’ Rights

Employees are provided all the protections of both Texas and U.S. labor laws. Of course, this means an employer cannot discriminate in the hiring, promotion, or termination of employees. Employees also must be paid regularly, and an employer cannot arbitrarily change the method or frequency of payment.

Independent Contractor’s Rights

Independent contractors are not considered employees, and do not have to be offered benefits that are provided to employees. This includes participation in a 401K plan, health insurance, and sick and vacation time. Additionally, independent contractors are not eligible for other state or federal employee benefits, such as protection under the Family Medical Leave Act (FMLA).

Independent contractors do, however, retain some rights that employees do not have. For example, independent contractors maintain control over their work and can complete the work whenever and wherever they want, as long as the job does not require the contractor’s physical presence. Additionally, contractors are generally free to market their services to other companies and may perform work for more than one company at a time.

While independent contractors are not protected under state and federal employment law, contractors can (and should) have a contract outlining the expectations on both sides. This can provide some protection to an independent contractor.

Are You Involved in an Employment Dispute?

If you are currently involved in an employment dispute and are not sure what your rights are and how to enforce them, contact the law firm of Rob Wiley, P.C., where our dedicated attorneys provide Texas employees with a wide range of employment-related services. We have extensive experience standing up for our clients’ rights. To discuss your case with one of our attorneys, call 214-528-6500 to schedule a consultation.

More Blog Posts:

Can a Texas Employer Require Employees to Pool Tips?, Dallas Employment Lawyer Blog, October 25, 2018.

Responsibilities of Texas Employers under the Americans with Disabilities Act, Dallas Employment Lawyer Blog, November 2, 2018.

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