An independent contractor is a person who works for a person or business, either while under a contract or on a job-by-job basis. Although independent contractors are typically employed to do work for a company, they are not considered to be employees of that company.
This means that an independent contractor has different rights than that of an employee. For example, in terms of work ownership, the independent contractor generally owns the rights to their own work.
An exception to an independent contractor having different rights from that of an employee is if the contractor and the employer have signed a licensing agreement that specifies that the employer is the owner of any and all works created by the contractor for that specific owner’s job.
As far as who qualifies as an independent contractor, that will depend on the nature of the scope of the person’s employment and job duties. What makes an independent contractor different from an employee is that they control what work they take on, as well as how they complete their work.
Examples of other factors that would designate a worker as an independent contractor instead of an employee include:
- The contractor provides all of the equipment necessary for them to complete the job;
- If, at any time, the contractor may be dismissed without due process;
- If, at any time, the contractor may choose whether or not to return to work without fear of losing their employment;
- If the contractor controls their working hours.
Additionally, each state also has its own rules which determine whether or not a worker is considered an employee or an independent contractor. In general, a person is considered to be an employee and not an independent contractor if:
- Their work hours are set by the employer, not the employee;
- The employee cannot accept or reject projects at will;
- The company provides all the necessary tools to complete the work required.
Once again, being an independent contractor differs from an employee-employer relationship in which the employer controls when, where, and how the employee’s work is completed. Additionally, independent contractors do not have taxes withheld from their pay by their employers. This means that the contractor, rather than the person who hires them to work, is responsible for their own taxes.
What Are the Benefits of Hiring an Independent Contractor?
There are many reasons why an employer may choose to hire an independent contractor as opposed to a new employee. One of the biggest reasons for an employer choosing to hire an independent contractor is that it can often save quite a bit of money. This is because an employer does not have to pay for costs associated with traditional employment, including:
Additionally, working with independent contractors may decrease an employer’s exposure to potential lawsuits. An independent contractor could potentially file a lawsuit against an employer for an injury sustained on the job. However, they cannot sue an employer for specific things related to traditional employment.
For example, an independent contractor does not have standing to sue for job discrimination or wrongful termination. This means that hiring an independent contractor instead of an employee will protect you from liability if you are choosing to hire a contractor over a traditional employee.
When Can I Be Sued by an Independent Contractor?
As an individual or employer that has hired an independent contractor, you still have a duty to maintain a safe work environment for the independent contractor to operate within. As such, you may fail to provide a safe work environment, and an independent contractor may be harmed while operating within the scope of their contract. In that case, you may be liable for any injuries suffered as a result of your negligence.
When a court is determining whether or not a property owner or employer is liable for injuries to a worker on their property, the court will typically look at the control that the worker had over the work itself. Thus, the main factor that a court considers when determining whether or not a worker is an employee or independent contractor is that employers have a certain level of direction and control over the work, whereas contractors have total control over the methods and means by which the work will be completed.
For instance, a company or individual might hire a worker to replace their roof and pay them based on the hours worked. If so, that may be used as evidence by a court that the worker has become, in essence, an employee of the homeowner. This is because contractors will typically ask for a fixed fee for the job, regardless of the time it takes to actually complete the job.
Further, an employer will not be able to dictate the methods by which an independent contractor uses to achieve the job. This is not to say that an employer cannot have any interactions with an independent contractor. In fact, independent contractors will often meet and consult with an employer in order to review the scope of the job and the overall guidelines by which they will complete the job.
For instance, an employer could hire an independent contractor to paint or clean their business. In that case, they could meet to decide that the business should be painted in a certain style and the frequency with which the building should be cleaned. They would also discuss the time to complete the project.
Further, if an employer or employees of an employer assist the independent contractor with the job, that may be considered to be providing direction to the worker. Additionally, providing the tools and other equipment needed to perform the job to the contractor may also open the employer to liability if the contractor is injured by a tool provided by the employer.
Courts will also typically hold employers liable where they have hired an independent contractor to do work that is likely to create a risk of harm, such as a construction project where the employer has failed to include in the contract that the independent contractor must take certain precautions or failed to exercise reasonable care in taking precautions to protect the contractors against risks known by the contractor.
Additionally, an independent contractor might sue an employer over a breach of contract. For example, the employer might fail to uphold their end of the contract by providing a certain workspace or failing to pay the contractor prior to work being performed. In that case, the independent contractor may sue for that breach. These civil lawsuits will be governed by the contract law of the state in which the work contract was entered into.
What Precautions Can I Take When Hiring an Independent Contractor?
There are many things that an employer may take when hiring an independent contractor to protect themselves. Once again, it is important for both parties to put any agreements made to perform work or services into a written contract. However, if there was no written contract for services expected or rendered, you may still sue or be sued by a contractor.
The reason that an employer can still be sued by a contractor without a written contract is because they could argue that an implied or oral contract was formed. In general, the person who is bringing the lawsuit will have the burden of providing evidence of some agreement made to perform the services.
Having a well-flushed-out contract that specifies the duties of each party in the work that is to be performed is the best way of protecting both parties from liability. Contracts involving independent contractors will generally provide for all of the following:
- A detailed agreement as to the services that are to be performed, as well as the expected time period for those services to be completed;
- Details regarding the time and form of payment;
- Agreements regarding any work product that may be considered confidential, which generally a non-disclosure agreement;
- Warranties for any work performed; and
- Agreements regarding restrictions or specifications regarding subcontractors.
Should I Contact an Attorney?
If you are an employer or individual who is considering hiring an independent contractor, you should consult with an experienced and local contract lawyer. Because state laws vary widely in terms of tax and employment law, working with an experienced contract attorney is the best way to ensure you receive relevant legal advice.
An experienced contract attorney can help you understand whether or not a worker is considered to be an employee or an independent contractor. An attorney can also ensure that you draft a solid work agreement that protects you from liability.
If you are an independent contractor, a contract lawyer can also help you determine how best to protect yourself. An attorney can review a contract before you sign it. No matter if you are the employer or the contractor, an attorney will also be able to represent you in court as needed should any legal issues arise.
