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What is the difference between an employee and an independent contractor?

On Behalf of | Jul 28, 2023 | Employment Law (Employee)

Many people, in casual conversation, refer to anyone doing work for a company as an employee. Technically; however, not all workers are considered employees. Some workers are classified as independent contractors and are, therefore, not entitled to the same benefits as workers classified as employees.

Employees vs. independent contractors

Employees and independent contractors differ from each other in several ways.

Employees are part of the company and are treated as such. Employees generally:

  • Receive hourly wages or a salary, as they are listed on the company payroll.
  • Receive benefits paid for by their employer (e.g., paid vacation).
  • Must work hours set by their employer and complete work as specified by their employer.
  • Receive extensive training.
  • Are covered under federal and state labor laws.

Generally, independent contractors provide a specific service to a business. They differ from employees in that they:

  • Receive an agreed-upon wage for a project, as opposed to a salary or hourly wage.
  • Do not have taxes withheld (as they pay their own).
  • Pay for benefits (e.g., health insurance).
  • Have flexible hours and control over how their work is completed.
  • Do not receive much training, as they are generally hired for a specific project.
  • Are not covered by federal and state employment laws.

Misclassification of employees

Employers may intentionally or unknowingly classify employees as independent contractors. Workers classified as independent contractors do not receive the wages and benefits employees are entitled to but may be treated like employees in that they receive performance reviews, have a company email address, and attend staff events.

Pennsylvania employees who are misclassified as independent contractors may sue their employers for this misclassification, with the help of an employment law attorney, to recover compensation for unpaid wages and employment benefits. If the employer intentionally misclassified the employee as an independent contractor, they may face additional consequences.