Independent Contractor Law

One of the most common ways employers take advantage of workers is misclassifing them as “independent contractors” or “1099 contractors” rather than employees. By misclassifying these workers as independent contractors, employers avoid paying certain expenses, including insurance, worker compensation benefits, taxes, and overtime pay.

Independent contractors vs. employees

An “independent contractor” or “1099 contractor” is a legal and tax-related term used in the U.S. to refer to a worker that contracts his or her services out to a business or businesses. A 1099 contractor is not an employee of the business or businesses with which he or she works, instead he or she is considered to be self-employed.

There is no single factor that differentiates an employee from an independent contractor, but the general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.

State Independent contractor laws

State laws may differ from federal requirements concerning independent contractors. For example, California independent contractor law is generally more pro-worker than federal law, and employers face more substantial penalties for misclassifying California workers as independent contractors.