In today’s varying economic climate, many employers are using and misusing the concept of independent contractor to engage individuals to perform services. Often, employers mistakenly think that as long as they call someone an independent contractor, then the employer can escape responsibility and liability under employment and tax laws for the relationship. This is often not the case under law. This article discusses the actual requirements for properly classifying someone as an independent contractor versus an employee. This subject is explored from both a U.S. domestic angle and a non-U.S. global one.
U.S. Legal Background
In the most traditional sense, under U.S. employment law, an independent contractor is a person or entity that performs a defined task or project for a pre-determined sum of money. The customer does not have any direction or control over how the task is performed other than to define the parameters of what the end result needs to be. Think, for example, of a painter or a mover, or in the employment context, an accounting firm or third-party temporary staffing company.
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