Independent Contractors laws & HR compliance analysis

Independent Contractors: What you need to know

An independent contractor is a worker who individually contracts with an employer to provide specialized or requested services on a project or an as-needed basis. Employers frequently retain the services of independent contractors to assist them during peak business periods, to work on special assignments, and to perform services that are not part of the employer's regular business. There is really no single, absolute definition of an independent contractor. The important distinction, from the point of view of an employer, is that an independent contractor is an individual who is performing services for the employer but who is not an employee. Courts and government agencies generally examine the nature of the relationship between workers and employers to determine a particular individual's status. Independent contractor status is generally characterized by an “arm's length” relationship between the worker and employer. Depending on the particular law, courts have applied different tests for determining whether an individual is an employee or an independent contractor.
Independent contractors are not covered under numerous federal laws. Whether a worker is an employee or an independent contractor is critical when it comes to important issues such as pension eligibility, workers' compensation coverage, wage and hour law, and many other matters. Employers do not pay employment taxes for independent contractors and do not withhold federal, state, and local taxes from payments made to independent contractors. Also, independent contractors are not included in an employer's benefits programs, and they are not eligible for unemployment insurance benefits. ...

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