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Wage & Hour LawIndependent contractors are not considered employees under the Fair Labor Standards Act and therefore are not covered by its wage and hour provisions. Generally, an independent contractor's wages are set pursuant to his or her contract with the employer.
A: Typically a worker cannot be both an employee and an independent contractor for the same company. An employer can certainly have some employees and some independent contractors for different roles, and an employee for one company can perform contract work for another company.
Some general protections provided under the Fair Work Act 2009 extend to independent contractors and their principals. Independent contractors and principals are afforded limited workplace rights, and the right to engage in certain industrial activities.
Contractors do not fall under most general employment legislation such as the ERA and the Holidays Act 2003, meaning they do not need to have a written employment agreement, and are not entitled to minimum wage or other employment entitlements, such as paid statutory holidays or sick leave.
During President Donald Trump's administration, the DOL issued a final rule clarifying when workers are independent contractors versus employees. The rule applied an economic-reality test that primarily considers whether the worker operates his or her own business or is economically dependent on the hiring entity.
The most common contractor payroll form is the 1099-MISC, which you're required to file if you pay a contractor more than $600 in a year. This can be a chore for the small business owner, as it means manually sending each contractor you hire their respective 1099.
If a person is truly an independent contractor (meaning they meet all three elements of the three part test), then the wage and hour laws are not applicable. This includes minimum wage, overtime, and rules for the timely payment of wages under the Massachusetts Wage Act.
An independent contractor is not an employee; therefore, he's not paid through the payroll. As a small-business owner with both employees and independent contractors, it is important that you know the differences between the two.
The contract should state who pays which expenses. The contractor is usually responsible for all expenses including mileage, vehicle maintenance, and other business travel costs; work supplies and tools; licenses, fees, and permits; phone and internet expenses; and payments to employees or subcontractors.
Payroll refers to the tasks an employer must execute to ensure employees are paid accurately and on time. An independent contractor is not an employee; therefore, he's not paid through the payroll.