Question

Employment Law- In your own words, Why is it important to classify workers correctly as either employees or independent contractors? -100 words or more, please.

Answer 1

A company should be carefully when classifying a worker as either an employee or an independent contractor in order to ensure that the company comply and bide to the federal and state law. Misclassification of a worker may have a number of taxes and legal consequence of the part of the employer. The question of whether to classify a worker as an employee or independent contractor is determined normally by the review of the applicable law and regulations and the facts of the particular work.

A company should be carefully when classifying a worker as either an employee or an independent contractor in order to ensure that the company comply and bide to the federal and state law. Misclassification of a worker may have a number of taxes and legal consequence of the part of the employer. The question of whether to classify a worker as an employee or independent contractor is determined normally by the review of the applicable law and regulations and the facts of the particular work. An employee is a worker employed to provide services for a fixed wage or salary and is under the control of the employer in regard to locations, tools used and hours worked to complete the job. On the other hand, an independent contractor is hired under a contract to provide specific services according to the contract condition and he or she is not under the level of control by the employer. To classify a worker as either an employee or an independent contractor a company weighs the level of control it has on the worker; does the company has control over what the workers does and how he or she does it; does the company has control over the aspect of the job; does the job requires an employee benefit or a written contract. As such it is important for a company to classify a worker as either an employee or independent contractors due to factors such as;

Withholding of income tax, medical care and social security; under the employee a company must withholder social security, medical care and income tax from salaries paid. Conversely, under the independent contractor a company is not subjected to withhold any taxes since labor and employment laws do not apply for an independent contractor. Hiring practice; for an employee he or she must apply for a job offer to the human resources, unlike the independent contractor who interacts with a specific department or person who wants a certain job performed. When paid; a company pays an independent contractor after receiving an invoice of the job completion. An independent contractor is normally not paid under the payroll, While, an employee is paid periodically and the period must remain the same unless otherwise stated. Tax reporting requirements; for the employee, a company reports all wages or salaries paid to the employee for the tax year period on the W-2, conversely for the independent contractor the company reports any payment of $600 or more for the financial year on the form 1099