What's the Difference Between an Employee and an Independent Contractor?

The answer depends on several factors, including the company’s right to control the worker’s schedule, duties, tools, opportunity for profit or loss, and how the work is performed.

Because misclassification can lead to wage, tax, benefits, unemployment, workers’ compensation, and penalty exposure, employers should review these relationships carefully, document the business arrangement, and confirm that the classification is appropriate under both federal and state law.