Do you understand the difference between an independent contractor vs employee and why the distinction matters? Read to find out!
What is the difference between an independent contractor vs employee?
It’s all over the news right now. The Biden administration recently released a proposal that could lead to millions of workers being classified as employees rather than independent contractors. This has been met with debate from both sides on what this could mean for workers in the future. For starters, what exactly is the difference between an independent contractor vs employee? And why is the distinction so important?
This is an issue I have extremely strong opinions about for a few reasons. 1) I’ve studied the history going all the way back to the abuse of “independent contractors” working in the Triangle factory. 2) I have firsthand experience of being misclassified as an independent contractor for years at my last job. And 3) I now legitimately am working as an independent contractor and can also see the concerns related to implementation of CA’s AB 5 law and why that could cause people to fear something similar on the federal level.
Here are my thoughts. The term independent contractor has been ambiguously defined for years. While some self-employed freelancers are truly deserving of the title, the ambiguous definition has left room for employers to take advantage and workers to have little recourse. For instance, many workers in the Triangle were considered independent contractors, responsible for providing their own thread and paid for pieces completed rather than an hourly wage. They were exempt from worker’s compensation if they were injured on the job because they were not actual employees.
In more recent years this practice and abuse continues. My last job classified me as an independent contractor. However, I had no independent business or other clients, only them. They dictated my hours and pay. I was required to attend staff meetings, complete employee training and I was also required to work weekends and after hours for the “good of the company”. They also withheld nothing towards my taxes or Social Security. In addition to that, I got no maternity leave and was only able to take six weeks unpaid time off after the birth of my youngest, two of which she spent in the NICU.
During Covid budget cut time when the rest of the staff was required to take their PTO, I was also required to take an unpaid week off from work. To say, I grew frustrated by all this was an understatement.
The final icing on the cake came when I finally decided to leave. I wrote a goodbye email and provided my personal contact info to clients to remain in touch. The company came after me with a cease and desist order for supposed solicitation. I have to admit, as my anger faded, I actually laughed at this, because I think they had even forgotten at this point that I wasn’t considered one of their employees with a non-compete clause!
I could have probably retaliated and fought against them for misclassification etc, but I didn’t have the time, money or energy. And that is the problem. I was a little person at the behest of a Goliath.
As the reporting about the Biden proposal comes out it’s mostly focused on the gig economy, but what many Americans fail to realize is just how prevalent this problem is. There are MANY workers misclassified as independent contractors and in all different sectors of work.
As I work as a true freelance independent contractor now, I do understand the fears people have of having their freedom clipped. How too much legislation could make a potential client hesitate from legitimately hiring a freelancer for work if they might have to put them on their books.
But, I also think it’s time for the abuses with this label to end. We need clearly laid definitive questions that distinguish the difference between a freelancer with their own business working with other clients and an employee who just isn’t being put on the books. We need enforcement so companies cannot get away with misusing their power. And workers need protections, recourse and freedoms to choose HOW they want to work in today’s economy.
Yes, it is an amazing opportunity to truly be a self-employed individual who can set their own hours and work flexibly with clients they choose. But that needs to be the actual choice a worker is making. Not a classification without the freedoms and benefits to accompany. Employers can’t have it both ways and classify a worker as a freelancer, but not allow them to actually freelance or dictate the terms of their hours or pay.
For more information on this topic- check out some articles here!