What are the positive and negative issues that are associated with being either an employee or an independent contractor?
The difference between an employee and an independent contractor.
An employee is when a company pays wages and employers must withhold income taxes and pay social security, Medicare taxes, and unemployment tax on wages.
Independent contractors on the other hand do not get any taxes, Medicare, or social security is taken out from their pay. They are responsible for self-employment tax. The client has the right to determine the outcome of the job but not how or what will be done to get the job done.
What are the positive and negative issues that are associated with being either an employee or an independent contractor?
Employee Independent contractor
| Positive | Negative | Positive | Negative |
| Benefits | Not at your full potential | Freedom | No Job security |
| Pay Check | Less control in your job | Earn more money | No benefits |
| Fixed working hours | No job security if at will or by contract | Pay lower income taxes | No labor law protection |
| Retirement | Not being paid your worth | Tax deductions | No equipment |
What are the risks associated with being an independent contractor? The risk of being a self-contractor is not able to have a steady job or paycheck. They get no labor law protections and no employee benefits. No retirement 401K or workers compensation if they get hurt on the job. Plus being an independent contractor also means that you have to provide and buy all equipment necessary to complete a job.
TWO:
The courts decide who is an employee by a few different factors. Behavior control like where, when, and how the work is to be done. Another example would be financial control by the employer. The employee has no profit or loss within the company. Lastly, the employee has no authorization to employ others (Moran, 2014). A positive of being employee is most times having medical, dental, and eye insurance. Being able to participate in future retirement benefits is a huge plus for employees. A negative of being an employee is not having as much autonomy as you would if you were an independent contractor. An independent contractor it is an individual hired by an employer to perform a specific task. A positive of being an independent contractor is being able to run your own hours and having more say so on what you do with your craft. A negative to being an independent contractor is not being eligible for paid vacation, sick time, health or unemployment insurance.
When reading the case of Eyerman v. Mary Kay Cosmetics I realized that as an independent contractor you’re are not covered under certain laws. In this case the law would have been the American with Disabilities Act. That would be a huge draw back for an independent contractor. Not fully being protected in any way under certain laws is concerning and going out on a limb for yourself. There is essentially no protection or backing.
References
Moran, J.J. (2014). Employment law: New Challenges in the business environment. Boston: Pearson.
THREE:
A worker can be both an employee and an independent contractor even though an employee receives a W-2 where the employer withholds income tax, social security, and medicare from wages that same employee can be an independent contractor as long as they perform completely different duties and is a 1099 independent contractor. Independent contractors are not under the immediate control of the employer. So the courts decision is based on the whether withholding are coming out of the employees wages, and if the are under the control of the employer. This classification is important in making the determination of an employees status.
Pros of being an independent contractor are companies are willing to pay more for independent contractors, they have the potential for large incomes and they are their own bosses. While independent contractors may work alongside managers and leaders they are not under their direct supervision. Cons are independent contractors are responsible for paying their own taxes, setting up their retirement funds and are not eligible for state unemployment benefits and some employers may require them to take out liability insurance. Some risk of being an independent contractor are Having a lack of employee benefits, improper tax filing and misclassification of status. While there is a potential to have unlimited or high income earning, there is the risk of lack of job security.
