Independent contractors have become more common than ever, in large part because of the rise of the Internet. It makes it possible for a lot of jobs that used to get done in a traditional office setting to get done anywhere in the world. As such, employers work with people regardless of location and don’t always need to hire them to officially join the company.
However, your classification makes a huge difference. An employee may be entitled to benefits and health insurance, while an independent contractor is not. If you think you’re an employee until you want to use those benefits and then you find out that the company considered you a contractor, it can be problematic. So, what is the difference and which one are you?
Clients vs. employers
The easiest way to think about the difference is that the company, for an impendent contractor, is really just a client. The contractor works with them and sells them a product or service. That person, however, works for themselves and is not always bound by the traditional rules that govern employees. It’s similar to having two companies work with each other. They’re both independent entities that cooperate in their industry.
That’s why the company does not have to give the contractor benefits like workers on salary or an hourly wage. The contractor is essentially running their own company — even if it’s just one person — and takes on those roles on their own. They then work contractually with the other company on specific projects or tasks, and they get paid for the completion of those tasks. They may not necessarily get paid directly for their time.
An employee, on the other hand, does work directly for the company and no one else. If they get a salary or an hourly wage, the pay lines up with their time or the contract they signed at hiring. They have to follow company rules to keep their job. They also get the same rights to benefits as other employees.
It is possible for these lines to get blurry, which is when it’s so important to know your legal rights. For instance, maybe a company hired you but allowed you to work from home. You think you’re an employee with a loose schedule; the company thinks you’re a contractor that they work with on a consistent basis. With computers and the internet, the lines are not always as clear as they once were.
Again, you must know your rights. If your employer classifies you incorrectly, you have to know what steps to take to protect yourself under California’s employment laws.