Employee vs. Independent Contractor – Part 3
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. Here’s the third of six factors – of the “Economic Reality Test” – to help clarify where you stand… or sit.
Stability is a beautiful thing. Some of us love getting a regular paycheck that we can count on and plan our lives around. Some of us thrive in a constantly changing environment, and the thought of being stuck at a desk makes us twitchy. How continuous your work is does have an impact on whether you are considered an employee or an independent contractor.
Scenario A: You’ve put in a week at the office. Your biggest client has been threatening to pull their account, and you’ve been in meetings all week coming up with solutions and generally being the calm in the center of the storm. Some days were 14 hours of solid work. But it’s Friday, you’ve completed this project, and that means it’s payday! Your next project doesn’t start for a few days, so you decide to take some time off and binge watch that show you’ve been putting off for six months. Employee or independent contractor? If you receive the paycheck only when the project is completed, you would be considered an independent contractor. You have the option to work only on the projects you choose.
Scenario B: You’ve put in a week at the office. There’s been the proverbial fires every day, and now one of your colleagues is out sick. Just when you think it can’t possibly get any busier, your biggest client calls in and threatens to pull their account. But it’s Friday and you will be getting a paycheck when you leave at 5pm! And two Fridays from now, you’ll be getting another one. If you lose that big client? You’ll still get paid. Employee or independent contractor? You are an employee – your paycheck is steady even though a project might not be completed.
Resources:
https://www.dol.gov/agencies/whd/government-contracts/small-entity-compliance-guide
