Get Recognition And Contract Status - Department Of Labor

Employee employment status. An employee works under a contract of employment and has all the protections of a worker with additional rights and protections. Employees must do the work outlined in their employment contract, and the employer can control how, when, and where the employee performs the work.

An independent contractor is a worker who often owns their own business and usually enters into contracts with employers to perform a specific project, typically on a short-term basis. In contrast, employees agree to work on a regular basis for a single employer.

An independent contractor is a worker who often owns their own business and usually enters into contracts with employers to perform a specific project, typically on a short-term basis. In contrast, employees agree to work on a regular basis for a single employer.

Contract employees work their own hours, often submit an invoice to an employer, and are paid upon project completion. Internal employees get W-2 tax forms for tax filing and contract employees receive 1099 tax forms. [Read more: W-2 vs. 1099 Contractors: Tax Differences Explained]

Contract employees may be called independent contractors, 1099 employees, or freelancers, and are considered self-employed workers who operate on a contract basis for clients. The contractor completes work for the client's company but is not on the company's W-2 payroll.

California Law states that a worker may be considered an independent contractor if (1) the worker has the right to control the performance of services, (2) the result of the work is the primary factor bargained for, and not the means by which it is accomplished, (3) the worker has an independently established business, ...

What is a contractual employee? Contractual employees are individuals who receive a fixed fee to work for a specified timeframe or on a certain project. Companies may also refer to these types of employees as independent contractors, contract workers, freelancers or work-for-hire staffers.

While contractors are self-employed individuals or even incorporated business entities, employees are typically economically dependent on their employers and so are entitled to certain rights and protections under the law.

Whether a worker is an employee or an independent contractor under the FLSA is determined by looking at the economic realities of the worker's relationship with the employer. If the economic realities show that the worker is economically dependent on the employer for work, then the worker is an employee.