Small business owners have several key responsibilities, especially when it comes to hiring and managing a workforce. When choosing staff members for your company, you may pay them as an employee or independent contractor. Employment laws distinctly classify each type of worker, which will impact your business in multiple ways. Here are some key differences to know. 

How to Distinguish Between Employees & Independent Contractors 

Employees 

When someone is hired as an employee, they generally work at the employer’s place of business according to set hours. They must also complete tasks under the direction and control of the employer and may be given training opportunities to enhance job performance. The business will provide all the equipment and materials an employee needs to do their work and will also pay for any business expenses they incur.  

Independent Contractor 

In contrast, independent contractors operate as their own business and may be hired for a certain length of time or just to complete a specific project. They decide how and when they’re going to work and are responsible for completing a job assignment on their own. As per employment law, independent contractors aren’t eligible to receive company benefits, such as health insurance, retirement plans, or stock options. 

Why the Distinction Is Important 

As a business owner, you’ll need to distinguish between these two categories because each carries different tax and legal implications. If you hire employees, you must withhold certain taxes from their check and pay unemployment tax on their wages. This is not the case for independent contractors, as they’re accountable for their own taxes. Furthermore, employment laws protect employees with workplace safety regulations, wage and hour rules, and anti-discrimination guidelines, whereas contractors typically aren’t extended the same protections.  

Failing to properly classify the people who work for you can prove to be a costly mistake. If you’re unsure which option is best for your circumstances, the legal team at Zangari Cohn Cuthbertson Duhl & Grello P.C. will provide guidance. Based in New Haven, CT, these seasoned attorneys have extensive knowledge of New England’s labor laws and will help you avoid employee misclassification. Call (203) 789-0001 to schedule a consultation, or visit them online to learn more about their employment law specializations.