There are several things that you should look at to see if you are an employee or an independent contractor. I think I should be classified as an employee but how do I know? Form 1099 is issued for independent contractors. Look at the tax form that your boss issues you at the end of the year. How can I tell which way I've been classified? Misclassifying you as an independent contractor saves the company you work for time and money but it hurts you and the rest of your community. Healthcare costs rise to cover the needs of injured misclassified workers who don't qualify for employer-sponsored health insurance, and public assistance increases when misclassified workers don't qualify for unemployment compensation. For instance, law-abiding employers face a disadvantage when competing for business.
Misclassification affects your entire community. An employee might qualify for Family Medical Leave Act, but an independent contractor never gets Family Medical Leave. Laws that protect you from harassment and discrimination based on sex, disability, religion, whistleblowing, and other illegal workplace conduct usually only protect employees. Minimum hourly wages, overtime pay, and rest break laws do not apply to independent contractors. Independent contractors get no benefits if they are hurt at work, unless they carry their own workers' compensation insurance.Ĭlassification as an independent contractor instead of an employee causes you to lose other important rights. Workers' compensation pays medical bills and lost wages caused by an injury at work. But a business does not pay unemployment insurance on independent contractors.Įmployees are protected by the Maine Workers' Compensation Act. That's because a business has to pay unemployment insurance on each employee. If you're being misclassified, it could be costing you money because you are paying the entire 13.3% on your own.Īlso, only employees are eligible for unemployment benefits. That means you pay 5.65% and your employer pays 7.65%.
As an employee, you split these taxes with your employer. These taxes make up 13.3% of your earnings. If you are an independent contractor, it is up to you to pay all of your social security and medicare taxes (you might recognize these taxes together as FICA or payroll taxes). When you work for someone, they can classify you as an employee or an independent contractor.
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