Are Contract Employees Actually Employees?
We frequently receive questions about “contract employees.” However, usually these workers are not employees at all; they are independent contractors performing services for a business pursuant to a services agreement or independent contractor agreement. Unlike employees, independent contractors don’t receive benefits, taxes aren’t deducted from their compensation, they usually have to supply their own equipment necessary to do their work (such as a laptop), and they aren’t entitled to the statutory rights and protections granted to employees (such as minimum wage, overtime pay, and FMLA leave).
Calling someone an independent contractor alone is not enough to ensure you will not ever be responsible for paying payroll taxes on their behalf. In South Carolina and most states, whether someone is an independent contractor, rather than an employee mistakenly identified as an independent contractor, is largely a matter of employer control. An independent contractor has to be, to a certain degree, independent. While a company can establish parameters for an independent contractor’s work and can require them to comply with company policies, independent contractors must generally be free to perform their services as they see fit. They are not subject to as much oversight as employees and should not be micro-managed by the company. Usually, they should not be given company business cards or otherwise represented to outsiders as if they are employees or have authority to bind the company in any way. However, there are exceptions to this rule for professionals, especially those that provide services for a business or organization on a part-time basis.
Still have additional questions regarding contract employees? At Jolley Law Group, we are here to keep you up-to-date and informed about all employment matters. Contact us for help with employment agreements, manuals, benefits, and payroll. We serve those that serve South Carolina and Georgia.