Mr X just got hired and naturally, he is excited about his new job but the person who hired him called him something he does not quite understand: “An independent contractor.” What does this mean? What are the effects? Does he have the same rights as an employee?
The importance of defining what your status is prior to employment cannot be overemphasized as an employee who is misclassified as an independent contractor loses all the rights and privileges of an employee and vice versa.

Who is an independent contractor?
An independent contractor is a self-employed person i.e. a consultant, lawyer, accountant, engineer or any other person who provides services to other organization for a fee. Common law principles further define independent contractor status by method of payment. If a person is on an employer’s payroll and receives a steady pay, clearly that the person is an employee and not an independent contractor.

An independent contractor is free from any control or influence of the client. He can apply his discretion concerning the manner and method of completing the task and whatever the outcome of the task, the independent contractor is responsible for it.



Who is an employee?
An employee is a person who works for the employer on a regular basis, in return for a remuneration called salary. The terms and conditions of the employment are described under a contract known as a contract of employment. An employee gives up elements of control and independence, is eligible for certain benefits and works within constraint of workplace.

Why Is It Important to Know a Worker’s Status?
The distinction between an employee and an independent contractor is very important. Apart from the fact that there are incentives for employing labor, an employer must withhold federal and state income taxes, Social Security/Medicare from employees, but not from independent contractors.
If an individual is working as an independent contractor, the “employer” does not make any of these deductions and the independent contractor must pay his or her own taxes along with income tax on earnings.

What are the factors to consider?



READ MORE: https://nairametrics.com/employee-vs-independent-contractor-differences-need-know/


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