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Classifying workers as employees or independent contractors

On Behalf of | Sep 27, 2021 | Uncategorized |

One of the primary options that Texas employers have in hiring workers is whether or not to make them company employees. Many companies contract with workers who effectively work for themselves in most respects. This is very common in the contemporary gig economy. This arrangement does have its advantages and disadvantages, but when legal matters arise, the court will still be very focused on the nature of the relationship as opposed to the structure that is typically used to the benefit of the employer. Both contracting parties should understand these particular potential legal ramifications before entering into an independent worker contract.

Time control

One of the most basic elements of working as an employee as opposed to a contracted agent is controlling the behavior of the individual, and in particular, if they are paid on a time schedule. Independent workers by nature have control of their own time and can work on their contract responsibilities as it fits their own schedule. If a worker is on a set work schedule, the nature of the relationship is typically an employee per federal tax law.

Financial responsibilities

Independent contractors also operate as independent or self-employed businesses per U.S. tax law. If the contracted employee accrues expenses while in performance of the duties which can be claimed on their tax filings, they are typically self-employed. Other forms of being duly self-employed are items such as rent for workspace and other financial necessities in completing work assignments.

In addition to these particular elements of an employment relationship, any individual who is given extended benefits such as paid vacation, a 401(k) retirement account, or pension benefits of any type is essentially a company employee. Contracting employers should always keep in mind that the actual control of the individual is the true determining factor in contracted agent versus company employee status.