Should You Be a Contractor or an Employee with Benefits | Aiman-Smith & Marcy
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Should You Be a Contractor or an Employee with Benefits?

It should come as no surprise that employers are constantly looking for ways to cut corners. Especially when it comes to paying employees. Some businesses pinch pennies so tightly that they have started purposefully misclassifying employees. While you may have heard of this with exempt and non-exempt employees, the growing ‘contractor culture’ has brought to light another issue: Classifying employees as contractors.

Being a ‘contractor’ means that you are paid hourly and are fully responsible for your own healthcare, retirement, and benefits. You also pay higher taxes as a contractor. Being an employee means that you earn an hourly or salaried wage and must also be provided healthcare, retirement, and benefits. And the business pays taxes on your behalf. So it’s immediately clear why employers would make this “mistake” when deciding who is and is not a contractor.

While some people enjoy the freedom of contracting, there are thousands out there who are being denied benefits on purpose when they are really fulfilling the role of a hired employee. Not a freelance professional.

Are You Contractor or an Employee?

The question we’re here to answer today is whether you should be getting benefits and job security like an employee when you are currently classified as a contractor. Like the exempt non-exempt issue, the line is drawn based on how you are paid, treated, and what the expectations are for your work. Let’s take a look at what qualifies a person as a full-time employee and not actually a contractor with no benefits.

You Work for One Business Exclusively

One of the perks of being a contractor is the freedom to take on as many clients as you can handle. A true freelancer may work one project at a time, scheduling future projects after the end date, or work with many projects and clients at once. And they have the freedom to do this.

However, if you are a ‘contractor’ who is only contracted with one employer and do not have the freedom to seek other clients, then you’re being done a disservice. If there is no end-date to the contract, if the contract continually renews, or if you’re not allowed to seek additional contracts, you are being treated like an employee. Not a contractor.

You Are Required to Clock Your Hours

Contractors keep track of their own hours and submit an invoice. Or are paid on a progress schedule or upon work-delivery based on the terms of their contract. Tracking your own hours and invoicing is one thing. However, if your employer requires you to ‘clock in’ at certain times each day and to use their internal time clock system, you are not being given the freedom of a contractor. Especially if you are expected to actually come into the office and work at an assigned desk. Instead, you are expected to live and work like an employee. So what’s the difference?

Your Client Makes All the Decisions

Are you free to decide when to work, how to do your work, and what resources you use in the process? Even working closely with a client, contractors make their own decisions about when, how, and with what resources they work. However, if your employer makes all or most of these decisions, including telling you what software to use and which vendors to work with, they are actually treating you like an employee. A real contractor would be able to deliver the final product completed however they see fit.

You were Interviewed and Hired

Employers do interview contractors before signing a work contract with them, but there is a difference between the contractor seeking process and the employee hiring process. At least, there should be. A contractor is judged on the work they produce and the amount of time it takes them to complete that work. An employee is interviewed by their future manager, tested for company culture ‘fit’, and onboarded after hire.

If you were hired like an employee but are being paid like a contractor, something is probably amiss.

For anyone who is currently being paid like a contractor without benefits or tax coverage, be alert! If these points have raised any red flags about your current job role, it’s time to consult an employment lawyer. Employers are constantly mis-classifying their employees to avoid costly legal obligations like providing healthcare, retirement plans, PTO, and other employee benefits. If you live and work like an employee, you should also receive all the benefits of being a real employee.

However, employers seldom simply say “Oops! We forgot to officially hire you!” and fix the situation. To get the fair treatment and benefits you deserve, legal action is almost always required. Here at Aiman-Smith and Marcy, we have built our reputation on helping employees stand up to the injustices (and convenient mistakes) of their employers. You don’t have to accept being treated as an employee but denied your rightful benefits. Let us help you take on your employer and make things right. For more information or a consultation on your personal circumstances, contact us at Aiman-Smith & Marcy today!