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Classifying Workers as Employee vs. Independent Contractor

Employment laws, according to Englebrecht and Dowis (2018), are established to spell out the association between an employee and worker. The relationship, rules, and benefits offered are often reviewed and agreed on from both sides during contract negotiation before work is started. There are two categories of workers: an independent contractor and employeeand business laws establish and exposes the distinction between the two. When operating a business, it is crucial to understand the difference between independent contractors and employees since, according to Tran (2016), liability of the principal torts are regarded differently in the two situations. For example, in an employee’s case, the employer has obligation for their physical torts, while in the independent contractor’s case, the contractee has no liability for their physical torts (Andoyan, 2017). Since the law undergoes continuous modifications, t is crucial for employers and businesses to have proper systems of categorization that have policies for managing and hiring independent contractors and/or employees because one may welcome lawful punishments if they wrongly classify their workers (Englebrecht & Dowis, 2018). Using a case study in which the agent’s employment categorization is to be determined and justified, this paper aims at discussing the various factors employed in distinguishing independent contractors and employees.

There is a set of differences between an employee and an independent contractor.  First, employees are individuals who are hired to carry out some jobs (Englebrecht & Dowis, 2018). Employees undergo recruitment processes before they are selected for particular jobs. Conversely, independent contractors are individuals who provide services to another non-employee (Andoyan, 2017). Independent contractors include, dentists, doctors, veterinarians, and lawyers. An employee is supervised by the employed to determine whether the work that was assigned has been done accordingly or not (Tran, 2016). The agent works fulltime for the principal agreed and receives a salary and not a fixed pre-agreed amount (Andoyan, 2017). An employer controls much of what is done by an employee, while independent contractors sign contracts which comprise of delivering services or products initially agreed on (Englebrecht & Dowis, 2018). An employee, according to Andoyan (2017), is paid a fixed amount of salary, while independent contractors are paid in accordance with contract signed. Therefore, kKnowing the difference between an employee and independent contractor is helpful in determining whether an employer has to hold back taxes or subject one to self-employment tax.

After reading, reviewing, and analyzing the case provided, the crucial factors that determine whether Joan is an employee or independent contractor is the fact that Joan works on jobs that are assigned to her and gets paid a commission for the work she does, payments which are determined from fees paid by clients. She receives her payment weekly and uses Berne and Madrid’s unused office space. Evidently, Joan works on contractual basis and paid on weekly basis, making her be classified as an independent contractor. To support this, Joan has not received any benefits as would be the case of an employee. Tran (2016) states that general principles is that a person is an independent contractor if the employer/payer has the right to control or direct the outcome of the work, not what will be executed and how it will carried out. While there is no mention of whether Joan’s payment is subjected self-employment tax, as is the case for independent contractors, the fact that she is paid for work done weekly and not a guaranteed salary or wage, Joan fits the classification of an independent contractor. Thus, Joan is an independent contractor.