Independent Contractor or Employee in a Gig Economy?

Stoltze & Stoltze PLC

With so many people finding work opportunities in the gig economy, there may be some questions regarding their classification – employee or independent contractor? The distinction boils down to an employer’s obligation to provide workers’ compensation, unemployment, overtime and other work benefits to an ’employee’ which are not extended to an independent contractor.

Already there have been a number of high profile companies that have faced litigation regarding employee classification prompting the Equal Employment Opportunity Commission (EEOC) to embark on a study to clarify employment relationships and the application of workplace civil rights protections in the 21st century with a nod to workers in a gig economy.

What is the difference between an independent contractor and an employee?

Generally, an independent contractor is a worker who contracts with an employer to provide a service on an as-needed basis, which is free from the control and direction of the performance of their work. Independent contractors are attractive to employers because they are outside the coverage of various laws that apply to employer-employee relationships. Employers do not need to withhold taxes from independent contractors, extend benefits programs to them, they are exempt from wage and hour laws, discrimination laws and unemployment insurance.

Independent contractors save businesses a lot of time, money and potential headaches but the relationship must fall into the classification of independent contractor, not an employee. Answering questions such as, “does the worker have to comply with an employer’s instruction about when, where and how to work?’ Is training at the direction of the employer required? Does the worker have a continuing relationship with the employer?”,  can point to whether a worker is or is not an employee. If they are, they are entitled to the whole kit and caboodle that an employer-employee relationship has to offer. Seeking the help of an experienced Iowa employment law attorney can help you determine your rights under the law.

If you have an employment law concern, contact the Des Moines employment law offices of Stoltze & Stolze PLC for your free consultation today at515.989.8529.