Whether you are an employee or contractor affects taxes, overtime, benefits and legal protections. A contract label does not decide it. The facts do.
Common factors
- How much control the company has over how and when you work.
- Who provides tools and equipment.
- Whether you can make a profit or loss.
- Whether you work for others.
- Permanence of the relationship.
- Whether the work is central to the business.
Why it matters
- Employees get minimum wage, overtime, unemployment insurance and workers' compensation.
- Contractors pay their own self-employment taxes.
- Employers face penalties for misclassification.
Different tests
Federal agencies and states use different tests, and some states use a stricter "ABC" test. A worker can be an employee under one law and a contractor under another.
If you think you were misclassified
- Record your hours, duties and control by the company.
- Save contracts, pay records and messages.
- Ask your employer to review your classification.
- File a complaint with your state labor agency or the U.S. Department of Labor, or ask the IRS to determine status.
- Consult an employment attorney.
Frequently asked questions
Can I be both?
You can work as a contractor for some clients and an employee for another.
What can I recover?
Possibly back wages, overtime and benefits, depending on the law.