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Understanding Differences Between Employees and Independent Contractors in Washington DC


When it comes to hiring an employee or an independent contractor for your business, it’s important to understand the differences between them so you don’t misclassify them. This could open you up to potential labor law claims. If you have questions about hiring someone for your business, it’s important to speak with a Washington DC labor and employment lawyer.

Independent Contractors Are Their Own Businesses

An independent contractor runs their own business. It may be a sole proprietorship or a corporation. They specialize in providing specific services and work for multiple clients. You cannot run the risk of treating them like an employee, as that is what puts you at risk for misclassifying them. Independent contractors should be treated like any other business-to-business relationship.

Independent Contractors Market to Clients

When someone is your employee, they are working for your company. Independent contractors have their own businesses, and that means they are typically always looking for new clients. Even if they have a long-term contract with your business, it doesn’t mean they aren’t working with other clients as well.

Independent Contractors Submit Invoices

Employees are paid for the hours they work while they are at your business. An independent contractor has to submit an invoice and do their own books to ensure they get paid. This is not an automatic salary they receive.

Independent Contractors Don’t Get Employee Benefits

Employers like to hire independent contractors because they are not on the payroll, and that means no benefits either. Companies save money by hiring independent contractors because they aren’t paying health insurance, vacation days, stock options, contributing to retirement plans, etc. However, this is why classifying employees is so important. You cannot hire someone as an independent contractor and treat them like an employee in hopes of getting away with not paying benefits. This could open you up to legal issues.

Independent Contractors Handle Their Own Taxes

Because independent contractors run their own businesses, they also pay all their own taxes. They aren’t on your payroll, so you aren’t paying benefits and related employment taxes for them. Instead, you may have them complete a W-9 to get their Tax Identification Number, or TIN. And then you’ll issue a 1099-MISC to ensure payments made to them are reported to the IRS.

Independent Contractors Choose When and Where to Work

Employees don’t have the option to choose when and where to work in most cases. Independent contractors make their own hours and choose their work environment. They aren’t responsible for working a certain number of hours, they are responsible for getting the work done and fulfilling the agreement.

Independent Contracts Often Sublet Work

Depending on the type of work and the industry, it’s not uncommon for independent contractors to delegate tasks or use subcontractors to help them. An employee doesn’t have the ability to hire someone else to assist their duties on an as-needed basis.

Contact a Washington DC Employment and Labor Law Attorney

If you have questions on classifying a new hire as an employee versus an independent contractor, speaking with a Washington DC employment law attorney can help. Contact Tobin O’Connor Concino P.C. today to schedule an initial consultation.


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