What's the difference between an independent contractor and employee agreement?

Short Answer: The agreement documents the relationship. The agreement itself does not determine the legal classification.

Why It Matters: Many businesses believe they can simply choose whether someone is an employee or an independent contractor. In reality, the law looks at the nature of the relationship, including issues such as control, independence, and the work being performed. Using the wrong agreement will not fix an incorrect classification.

Misclassification can expose a business to taxes, wage claims, penalties, and other liabilities, making it important to evaluate the relationship before drafting the paperwork.

Common Mistakes: Choosing contractor status because it's easier; assuming a contract alone determines classification; using the same agreement for every worker.

Michelle's Bottom Line: Simply calling someone an "independent contractor" in the agreement is not enough. The contract should be drafted so that its terms align with the legal indicators of an independent contractor relationship. If the agreement gives the business the type of control typically exercised over employees, it may undermine the intended classification.