Employee or independent contractor?
A worker is an employee if they are economically dependent on you; the label in the contract does not decide it.
Source law: Fair Labor Standards Act, 29 U.S.C. 203; 29 CFR Part 795 · Source: NovaCopilot
Common questions
What you must do
- Assess each worker under the economic reality factors: profit or loss opportunity, investment, permanence, control, integral work, skill (29 CFR 795.110)
- Pay employees at least minimum wage and overtime (29 U.S.C. 206–207)
- Withhold and pay payroll taxes for employees (26 U.S.C. 3102, 3402)
Penalty
Back wages plus an equal amount in liquidated damages, and back payroll taxes with IRS penalties. (29 U.S.C. 216(b); 26 U.S.C. 3509)
Who is covered
Worker performing services for pay · Economic dependence on the business · Control over how the work is done
Checklist
- Written classification analysis per role
- Contractors invoice and set their own methods
- No contractor doing core, permanent work
- Review when duties change
Related
topic:us:employee-vs-contractor · sha256 … · https://legal.exploreworldai.com/api/public/v1/topic-graph/us/employee-vs-contractor
Written from US federal law. State law may give more rights. Not legal advice.
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