Glossary > Employment Law > Wage And Hour Laws > Payroll Practices

Independent Contractor

Independent Contractor refers to a worker who is not considered an employee by the company they work for. Independent contractors are typically hired on a contract basis to complete specific projects or tasks and are responsible for their own taxes and benefits.

Example #1

A freelance graphic designer hired by a marketing agency to create a new logo for a client is an independent contractor.

Example #2

A freelance writer who provides articles on a per-piece basis to an online publication is also considered an independent contractor.

Misuse

Misuse of classifying employees as independent contractors can lead to exploitation of workers. For example, some companies may misclassify employees as independent contractors to avoid providing benefits, paying minimum wage, or adhering to labor laws. This practice can deprive workers of essential protections and benefits, impacting their financial stability and overall well-being. It is crucial to prevent such misclassification to ensure fair treatment of workers.

Benefits

One benefit of being an independent contractor is the flexibility it offers. Independent contractors have more control over their schedules and work arrangements. They can choose which projects to take on, negotiate rates, and work for multiple clients simultaneously, providing them with a diverse income stream and professional autonomy.

Conclusion

Understanding the distinction between employees and independent contractors is crucial for ensuring fair labor practices. Protecting workers from misclassification and ensuring they receive proper benefits and protections are essential for promoting a transparent and equitable marketplace.