For legal and tax reasons, it is important that the company for which you work classifies you correctly as either an employee or an independent contractor. Misclassification is a problem because employers can save a lot of money but saying you are an independent contractor.

The U.S. Department of Health & Human Services explains there are important differences between the two employment classifications. If you discover your employer has misclassified you, then you have the right to take steps to remedy it. The chances are good that your employer is doing this with everyone with whom you work, which could make the basis for a class-action lawsuit.

Independent contractor

If you are an independent contractor, your employer will not have a lot of control over your work or working conditions. Your employer will not be able to dictate when you must work or other aspects of your job. It can set deadlines or due dates and control the quality of your work, though.

As an independent contractor, your employer does not have to pay employment taxes for you, so you will not have anything withheld from your paycheck. You will have to pay for those. In addition, your employer does not have the obligation to provide you with any benefits. Furthermore, employment laws do not apply, so you do not have a lot of protections that employees have.

Employee

As an employee, your employer has complete control over your work environment and conditions. Your employer can make you work a set schedule and supervise you as you work.

When you are an employee, your employer must pay employment taxes. It must provide you benefits because it must follow employment laws.