Workers need to be categorised properly. In the event of an injury, workers’ compensation benefits and coverage are available to those who are direct employees of a corporation. Though, a sizable section of the workforce in Arizona and the United States as a whole are independent contractors. So that you know what to expect from your employment relationship, we’ll go over the key distinctions between independent contractors and employees.
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The Concept of Freelancers
Over the past decade, and especially since the start of the COVID-19 pandemic, people across the country have been exposed to the “gig economy,” which is comprised largely of independent contractors. For some time now, the traditional employee-employer relationship has been changing, and with that, we’ve had to adjust to new terminology.
A clear definition of independent contractors is essential. To accomplish this, we will be consulting the IRS’s online resources. The Internal Revenue Service employs a “right-to-control” test to figure out if an individual is an employee or an independent contractor. Whoever is in charge of the workplace, the employer or the employee will be the focus here. To determine if an individual is an independent contractor, questions like the following may be asked:
- To what extent does the worker’s employer have the authority to direct and supervise his or her work?
- Does the worker’s employer have a say in the operational details of the employment (such as how much they are paid, whether or not they are reimbursed for expenses, and who provides equipment and supplies)?
- Is there a written agreement outlining the terms of employment, including vacation and sick time, health insurance, and retirement provisions?
- In other words, do you plan to keep working together?
Does the company rely heavily on the work being done?
If workers decide when and how they get their work done, they are considered independent contractors. Additionally, an independent contractor is likely independent if the work being performed for the employer is outside the normal course of business.
Independent contractors are not protected by federal or state labour laws. This means that they are not eligible for the following benefits, among many others, that are provided to regular employees:
- Extra compensation with medical coverage
- Insurance payments for injured employees
- Lowest wage
