However, your earnings as an employee may be subject to fica (social security tax and medicare) and income tax withholding for more information on determining whether you are an independent contractor or an employee, refer to the section on independent contractors or employees. Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor.
Often, independent contractors and employees work side by side at the same company, even doing the same or similar work but there are very important legal differences between being a contractor and an employee. Employees, not independent contractors a worker does not have to meet all 20 criteria to qualify as an employee or independent contractor, and no single factor is decisive in determining a worker's status. Maybe you've never thought about the difference between being an employee and being an independent contractor (also called a consultant) in many respects, there.
However, whether these people are independent contractors or employees depends on the facts in each case 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. For the independent contractor, the company does not withhold taxes employment and labor laws also do not apply to independent contractors to determine whether a person is an employee or an independent contractor, the company weighs factors to identify the degree of control it has in the relationship with the person. Misclassified employees often are denied access to critical benefits and protections they are entitled to by law, such as the minimum wage, overtime compensation, family and medical leave, unemployment insurance, and safe workplaces. If the irs would consider the worker an independent contractor, your company does not have to withhold federal payroll taxes as you would for an employee, including social security taxes, federal disability taxes, and federal income taxes.
In handling a matter where employment status is an issue, that is, employee or independent contractor, dlse starts with the presumption that the worker is an employee labor code section 3357.
The irs distinguishes between an independent contractor and an employee for the purpose of payroll taxes and withholding taxes basically, an independent contractor is an independent business person who runs his or her own business but who does work for another business.
Misclassification of employees as independent contractors misclassified employees often are denied access to critical benefits and protections they are entitled to by law, such as the minimum wage, overtime compensation, family and medical leave, unemployment insurance, and safe workplaces. A business may pay an independent contractor and an employee for the same or similar work, but there are important legal differences between the two for the employee, the company withholds income tax, social security, and medicare from wages paid for the independent contractor, the company does not withhold taxes.