25 Oct What is the difference between being an independent contractor and an employee?
Work opportunities and job titles are constantly adapting to the world around us. There are more and more jobs being created to suit the needs of companies and the developing needs of the consumer. As more work opportunities are emerging online, there is now a greater demand for independent contractors. But what is the difference between being an employee and being hired as an independent contractor?
Independent Contractor versus Employee
An independent contractor is a worker who is self-employed but performs certain tasks for a company, employer, or other party. For example, independent contractors can be writers, musicians, subcontractors etc. Independent contractors are not a type of employee. Both types of workers function and are compensated quite differently.
Some of the differences between an independent contractor and employee are:
- Independent contractors do not receive employee benefits or additional compensation. Independent contractors create their own work hours and potential pay based on how much work they fit into their own schedule.
- Employees receive payments with taxes already deducted from their paycheque, whereas independent contractors are responsible for paying their own taxes.
- Employees are protected under the Employment Standards Act (ESA) and independent contractors are not.
- Independent contractors can have multiple clients and could work for many different employers at one time. For example, musicians could be hired by a restaurant, event coordinator, golf course, personal event etc. all within the same week. It is up to them to decide how many people to work for. However, an employee is usually restricted to performing tasks for their employer based on their work duties and obligations.
- Independent contractors pay for their own costs and deduct those from their income, while an employee receives the necessary equipment they need from their employer. For example, a freelance writer would pay for their own laptop and an employee would be supplied this laptop to perform their daily tasks.
Independent Contractors and the Law
It is against the law to misclassify an employee as an independent contractor. As stated above, the independent contractor is not protected under the ESA, and thus, is not entitled to the employment benefits and protections that this provision guarantees. Generally speaking, if an employee believes they are being misclassified as an independent contractor they would need to prove in a court of law that they work for the employer and not themselves.
If you are being misclassified as an independent contractor or have questions about these differences, please contact KCY at LAW by filling in an online consultation request or contact us by phone at 905-639-0999 to book your consultation today.