Independent Contractor vs. Employee

Independent contractors provide goods or services according to the terms of a contract they have negotiated with an employer.  Independent contractors are not employees, and therefore they are not covered under most federal employment statutes.  They are not protected from employment discrimination by Title VII, nor are they entitled to leave under the Family Medical Leave Act.  Employers are not required to pay independent contractors overtime under the Fair Labor Standards Act or provide accommodations for a contractor’s disabilities under the Americans with Disabilities Act.  An employer is also not responsible for an independent contractor’s unemployment or worker’s compensation benefits and is not required to provide an independent contractor with a pension or other employment benefits.  Plus, an employer does not have to pay employment taxes for an independent contractor.

Your employer cannot simply call you an independent contractor to avoid federal and state legal requirements – if the characteristics of your job resemble those of an employee, then your employer must treat you as an employee.  An independent contractor’s job is characterized by independence.  You might be an independent contractor if:

  • You are paid by the project instead of receiving an hourly, weekly or monthly wage;
  • You provide your own tools, equipment or materials;
  • You are free to perform services or work for other clients;
  • You are free to work off-site and are not required to work during established hours;
  • You are free to subcontract out some of the work to others; and
  • You are free to complete the project at your own discretion and are not given specific instructions by the employer.

As you can see, there are many reasons why employers prefer independent contractors to employees.  Therefore, it is not surprising that some employees are incorrectly classified as independent contractors.  Courts and federal agencies use multiple tests to determine whether an independent contractor is actually an employee, and the standards differ depending on the employment rights sought.  Examples of workers who are often misclassified include truck drivers, construction workers, bicycle messengers and high-tech engineers.

As an independent contractor, you have the right to ask a state or federal agency to review your employment status.  If you think you might be an employee and are having a problem with your employer concerning your wages or working hours, click here.  If you are experiencing discrimination and want to know whether you are an employee under the Americans with Disabilities Act or Title VII, please contact your nearest EEOC field office.

Wage & Hour Law

Independent contractors are not considered “employees” under the Fair Labor Standards Act and therefore are not covered by its wage and hour provisions.  Generally, an independent contractor’s wages are set pursuant to his or her contract with the employer. These contracts often establish a deadline for completion of the work but do not contain set hours where the contractor is required to work on the employer’s job site.  This flexibility is one of the hallmarks of an independent contractor relationship.

The Right to Organize

As an independent contractor, the terms and conditions of the work you perform are set out in a contract between you and the employer.  Even though you are not considered an “employee” under federal labor law, you may still join a union.   However, you should keep in mind that a unit of independent contractors is not subject to the same privileges and protections as a regular union bargaining unit.  For example, an employer is not under the same obligation to bargain with a union regarding contract terms for an independent contractor that it is to bargain over issues affecting its regular employees.  Also, an independent contractor who went on strike would not be protected from employer reprisals under the National Labor Relations Act.         

Despite these limitations, joining a union as an independent contractor can yield lots of useful benefits and resources.  The local can help you secure health and equipment insurance, provide you with contract advice, and help you find and secure jobs.  The union can also fight for your legislative interests and provide educational programs.  One thriving example of an independent contractor unit is the Guild Freelancers, an active group of independent writers and journalists who have organized as a part of the larger Pacific Media Workers Guild, a CWA local.  Another great example is WashTech (the Washington Alliance of Technology Workers), a CWA local formed by Microsoft contract employees in 1998.

For more information on joining the CWA as an independent contractor, please click here to contact a union organizer. 

Intellectual Property Rights

Creative works, such as songs, articles, and works of art are covered by copyright law.  Under the Copyright Act of 1976, an independent contractor who has created a work for an employer owns the rights to that work, except in limited circumstances.  The employer that commissioned the work automatically owns the rights only if the work qualifies as a “work made for hire” under the Act and the parties have signed a written agreement stating that the commissioning employer is the author of the work.  To qualify as a “work made for hire” under the Act, it must fall into one of the following nine categories: (1) a contribution to a collective work, (2) part of a motion picture or audiovisual work, (3) a translation, (4) a supplementary work, (5) a compilation, (6) an instructional text, (7) a test, (8) answer material for a test, or (9) an atlas.

Rights of ownership in a commissioned work automatically belong to the independent contractor if the work does not fall into one of the nine categories listed above and the contractor has not signed an agreement stating otherwise.  However, an employer can become the owner if the independent contractor agreement specifically assigns to him or her the rights to any work made under or according to the agreement.  It is extremely important to read an independent contractor agreement very carefully before you sign to ensure that you do not give away your rights to valuable intellectual property.  

*Please note that this section on copyright ownership only applies to work created by independent contractors.  If you are an employee, the rights to any work you created within the scope of your employment automatically belong to your employer.

Discoveries and tangible inventions, on the other hand, are subject to patent law.  Under patent law, rights to the object vest with the original creator, and therefore are generally held by the employee or independent contractor.  As in copyright law, an employer can gain control of those rights if there is an assignment provision in the employment contract or independent contractor agreement.  

If you are unsure whether you own the rights to a work you created or a product you developed as an independent contractor, review your contract agreement.  If you see a clause that looks anything like this – “Contractor agrees that any and all work or inventions conceived, written, or created in the performance of work under this agreement shall be the sole and exclusive property of the company” – you probably do not own the rights to that work.

For more information on copyrights, click here.  To learn more about patents, please visit the U.S. Patent and Trademark Office.