What is the difference between an independent contractor and an employee?

By Douglas Lipsky

The difference between an independent contractor an employee can be a very complicated analysis. There are a number of different tests to determine when someone is properly classified as an independent contractor. I like to simplify it when I talk to my clients and the way I simplified is this: If you’re working through a company that then sends you out to another company to perform a service, and the company that you’re working for is actually giving you a paycheck that has withholding taken from it and at the end of the year you get an IRS Form w2 you’re probably an independent contractor. If there’s no company that’s assigning you out to the other company that where you’re performing the services and you’re literally just showing up at a company and performing services and they’re paying you on a 1099 which means they’re not taking withholdings at the end of the year you get an IRS Form 1099 and they’re paying you under your own social security number so in other words the 1099 is issued directly to
you and not to some other company that is providing the sort of the go-between then you’re almost always misclassified as an independent contractor and you actually are an employee. Obviously, there’s exceptions to that but that’s sort of a general rule of thumb.

About the Author
Douglas Lipsky is a co-founding partner of Lipsky Lowe LLP. He has extensive experience in all areas of employment law, including discrimination, sexual harassment, hostile work environment, retaliation, wrongful discharge, breach of contract, unpaid overtime, and unpaid tips. He also represents clients in complex wage and hour claims, including collective actions under the federal Fair Labor Standards Act and class actions under the laws of many different states. If you have questions about this article, contact Douglas today.