The average business in Georgia might employ both employees and independent contractors. As an employer, correctly classifying workers is essential for meeting legal obligations. However, some business owners struggle to differentiate between an employee and a contractor, which can lead to trouble in the future. Here are a few key differences between the two.
Hours and compensation
While there can be some nuance to these differences, employees generally work hours set by their bosses while contract workers set their own hours. Employers might also provide more direction and exert greater control over an employee than with contractors, who tend to work more independently. There is a difference in compensation, too. Employers should withhold certain taxes from employees’ paychecks, while contractors pay their own self employment taxes when applicable.
Qualifying for benefits and protections
In general, employees have access to a wider range of benefits than contractors do. For example, employees are more likely to be protected by antidiscrimination and workplace safety laws. Other benefits that employees tend to have access to that contractors do not include:
- Unemployment benefits
- Workers’ compensation benefits
- Minimum wage and overtime pay rules
While these might seem like obvious differences, it can be harder than it seems to correctly classify a worker. Unfortunately, accidentally misclassifying a contractor as an employee or vice versa can have serious legal repercussions in the future. When in doubt, Georgia business owners are well-advised to speak with an attorney who is well versed in employment law.