How to Distinguish Between an Employee & an Independent Contractor

Video Transcript

"Distinguishing between an employee and an independent contractor can be a difficult task in some cases. My name is Gloria Campbell. I'm with Advantage Training Systems, in St. Petersburg, Florida, and I'm going to give you some guidelines on how you might be able to distinguish between an employee and a sub-contractor. The first thing I'm going to suggest you do is that you look at what the federal laws say regarding independent contractors and employees. One of the primary differences between whether you categorize someone as a sub-contractor or an independent contractor and an employee is do you have control over their time? Do they have a schedule? Are they required to show up for work at a particular time, eight a.m. Monday through Friday, or certain times? That's one of the tests that the federal wage and hour laws will use to determine whether someone was actually an independent contractor or an employee. You want to do that very early. You also want to make sure that an independent or sub-contractor signs an agreement that states that they know that they are going to be responsible for all of their income taxes, and that they are in fact a sub-contractor or a independent contractor. My name is Gloria Campbell. I'm with Advantage Training Systems, in St. Petersburg, Florida, and it's important that you as a business owner distinguish between sub-contractors or independent contractors and employees, because later on, you may have to pay a heavy penalty."