Employee vs. Independent Contractor – Part 2
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 a quick discussion of the second of six factors – of the “Economic Reality Test” – to help clarify where you stand… or sit.
We all want to love the company we work for. We spend a large number of our hours there, and doing meaningful work matters. We are invested. This investment could be monetary in nature, or an investment of time, and doesn’t stop there. But are you invested as an employee or an independent contractor?
Scenario A: ABC company is your baby. You’ve grown your program exponentially, and increased income for your company. You use your company’s software and programs to do this. You interact with your colleagues regularly, and you lead new employees to follow in your footsteps. Occasionally you stay late to complete all your tasks. Employee or independent contractor? In this case, your company has made the majority of the investment in software and supplies, so you would be considered an employee.
Scenario B: ABC company is your baby. You’ve invested in brand new software to engage new clients. You’ve increased your income for a few months, but with high rent and the cost of supplies, you have a few months of barely breaking even. You spend a great deal of time outside of the office engaging with clients and working through some of the software issues after hours and on weekends. Employee or independent contractor? Because you purchased your own software, rent your own space, and spend your time and money to find new clients, you would be considered an independent contractor.
Resources:
https://www.dol.gov/agencies/whd/government-contracts/small-entity-compliance-guide
