1. Worker classification:
Workers are classified as employees if they are under the direction and control of their employer. Contractors are classified as self-employed and are not subject to the same rules and regulations as employees.
2. Wages and hours:
Employees must be paid at least minimum wage and must receive overtime pay for hours worked over 40 in a week. Contractors are not entitled to these benefits.
3. Overtime pay:
Employers must pay overtime wages to employees who work more than 40 hours a week. This does not apply to contractors.
Employees are typically entitled to benefits like health insurance, paid time off, and retirement plans. Contractors are not typically offered these benefits.
Employees have payroll taxes withheld from their paychecks, while contractors are responsible for paying their own taxes.
6. Workers' compensation:
Employees are covered by workers' compensation insurance if they are injured on the job. Contractors are not typically covered by this insurance.
7. Unemployment insurance:
Employees can file for unemployment insurance if they lose their job. Contractors cannot file for unemployment insurance.
8. Right to terminate the relationship:
Employers can terminate the employment relationship with employees without notice or reason, but they cannot do so with contractors.
9. Notice of independent contractor status:
Employers must notify workers in writing if they have been classified as contractors rather than employees.
10. Signatures of both parties acknowledging the independent contractor relationship:
Both the employer and the contractor must sign a document acknowledging that the worker is a contractor rather than an employee.