The Ticktin Minute October 30, 2017 – Independent Contractor vs. Employee (Financial Factors)

Independent Contractor vs. Employee (Financial Factors) Employment Law

Understanding the difference between an employee and an independent contractor is extremely important in the understanding relative rights in employment law. There are three (3) sets of factors that assist in determining whether an individual is an employee or independent contractor: (1) Behavioral; (2) Financial; and (3) Type of Relationship. Each of these three (3) sets of factors are analyzed and an overall answer of whether an individual is an employee or independent contactor is determined. Determining this answer is important because different employment laws would apply.

The second set of factors that are used to determine whether an individual is providing services to an employer as an independent contractor or an employee stems from the financial investment in the services provided. For instance, if the employer provides the equipment (such as computers) to the individual, then that would lean towards that worker being deemed an employee. However, if the individual must acquire their own equipment (or use their own equipment), then they would likely be categorized as an independent contractor. To the same effect, independent contractors are more expected to have unreimbursed expenses. Employees may have unreimbursed expenses, however, it is much less likely and can usually be negotiated.

Further, the ability to make profit or (losses) is another financial factor that determines whether an individual is an employee or independent contractor. An employee typically does not have the same opportunity for losses as an independent contractor does. Also, an independent contractor is generally free to seek out other business opportunities and Independent contractors often advertise, maintain a visible business presence, either online or otherwise, and are available to work in the relevant market.

If you or someone you know has a potential employment law claim and/or questions regarding your rights, contact the attorneys of The Ticktin Law Group for a complimentary consultation.