Employee vs. Independent Contractor – Part 1
Are you entitled to minimum wage and overtime pay? That depends on whether you are an independent contractor or a W2 employee.
Did you receive a 1099? That is no guarantee you are an independent contractor. We’ll discuss the six key factors – the “Economic Reality Test” – to help clarify where you stand… or sit.
You make money! While exciting, this fact alone does not help decide if you are an independent contractor or an employee. Your opportunity for profit or loss matters in the decision.
Scenario A: You have always worked 10 hours a day. You have a set schedule, and you are offered overtime. You accept! Employee or independent contractor? Although you are making more money by working more hours, you are still doing it at someone else’s direction, so you would be considered an employee.
Scenario B: You have always wanted to work 10 hours a day. You go to various corporations and local businesses making presentations and talking to big bosses. You generate enough business that now you are working 10 hours a day. Employee or independent contractor? In this case, you decided which jobs you would take to fill up your 10-hour day. Those managerial-type decisions affected your opportunity for profit or loss, and therefore, you would be considered an independent contractor.
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