There may be some factors suggesting a California worker is an employee and others suggesting he or she is an independent contractor. It is even possible that a worker can be considered an independent contractor for purposes of IRS tax filing, but they are considered an employee under California’s wage and hours laws.
What jobs could be considered an independent contractor?
People such as doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers, or auctioneers who are in an independent trade, business, or profession in which they offer their services to the general public are generally independent contractors.
Which is better an employee or an independent contractor?
Employees, on the other hand, are workers who do what you tell them, when you tell them and how you tell them to do it. You define the work hours: Generally, independent contractors do the job as they see fit. They set their own hours and work how and when they want. And they should be paid by the project — never on an hourly basis.
Who is the client of an independent contractor?
The client of an independent contractor has no such obligations. The payment made to the independent contractor is the compensation agreed upon in the contract between the client and the independent contractor. The independent contractor also pays their own contributions to the SSS, Philhealth and Pag-Ibig.
How to report payments to employees and independent contractors?
Payments to contract workers must be reported annually on Form 1099-NEC (formerly 1099-MISC before 2020), and You must verify taxpayer ID for independent contractors by having the person complete Form W-9; if the taxpayer ID cannot be verified, you must take backup withholding from the contractor’s pay. 6 7
What happens if you misclassify an employee as an independent contractor?
Under the Law. The rules surrounding whether a worker is an employee or independent contractor are complex. But it’s important to get it right, because when you misclassify an employee as an independent contractor, you open the door to significant legal and financial troubles.
