Companies in Idaho and throughout the country are responsible for accurately deciding if a worker is an employee or an independent contractor. Although using the independent contractor label may be advantageous for a company, the IRS has strict guidelines as to the differences between the two classifications. Companies may face severe penalties if they improperly label their workforce.
Key differences between the classifications
Anyone required to work a set schedule is typically an employee. The same is generally true if they are required to use materials provided by the company such as a computer or cellphone. Finally, you may be an employee for employment law purposes if you aren’t able to negotiate your own pay rate in favor of one set by the company itself.
What to know about being an independent contractor
There are several potential benefits for companies and workers classified as independent contractors. Companies are not required to pay independent contractors a minimum wage, withhold employment taxes or provide other benefits such as medical insurance or paid time off. Contractors are generally allowed to work for multiple clients simultaneously, which may help them maximize their income and provide a proper work/life balance. Independent contractors are allowed to deduct expenses that employees may not such as the cost of work materials, a home office or the employer portion of a 401(k) contribution.
If you feel as if a company has misclassified you, you have the right to take legal action. If your claim is successful, you may be entitled to the value of benefits improperly withheld. It may also be possible to obtain the difference between what you were paid and the prevailing minimum wage in the state.