Independent Contractor vs Employee in Arizona

independent contractor vs employeeThe unemployment rate is at historic lows and it seems like anyone who wants a job can find one. But does that mean that everyone is properly employed? What we mean by that is this – if you are labeled as an independent contractor by an employer, you may be receiving less wages and benefits than you should.

A popular tactic by Arizona employers is to label employees as independent contractors in order to avoid making certain payments. If this has happened to you, you may need to seek assistance from an Arizona employment law attorney who can help you secure the compensation you deserve for your hard work.

Why Would An Employer Do That?

By classifying workers as independent contractors or freelancers, employers can save a tremendous amount of money. Since employers are required to pay half of each employees’ Social Security and Medicare taxes, the eliminate that burden by having only independent contractors. They can also reduce their workers’ compensation premiums, won’t have to pay unemployment insurance, and don’t have to worry about sick pay, minimum wage, overtime, or break pay.

In short, employers often look to maximize their profit by hurting their employees.

However, there are guidelines that must be followed in the state of Arizona when it comes to determining whether a person is an employee or an independent contractor.

Independent contractors must meet many criteria. Some of them include that the person:

  • Offers their services to the general public
  • Has more than one customer or client
  • Pays their own business and travel expenses
  • Provides their own tools and materials necessary for completing the job
  • Operates under their own supervision
  • Cannot be fired (contracts can be terminated)
  • Sets their own hours for work performed
  • Can hire other workers to assist or complete their work
  • Is not provided training
  • Performs services that the business cannot perform themselves

There are other items on the list and if most of them are not met, a person is likely to be considered an employee for both state and federal tax purposes.

How Can This Hurt You?

Many people are just happy to have a job and do not consider the consequences of their classification. However, please consider the following consequences of being an independent contractor:

  • You are not subject to minimum wage laws
  • If you are injured, you will not get workers’ compensation coverage
  • You cannot claim unemployment benefits
  • There are no paid sick days, breaks, or overtime
  • You will get no health insurance coverage through the employer
  • You are required to pay both portions of Social Security and Medicare taxes

Is it fair that you are punished because an employer is trying to pad their bottom line?

Please note that if you have not declared that your independent business status with your employer, you should be classified as an employee. The Arizona legislature passed a law in 2016 making this a requirement in an attempt to ensure that all workers are classified appropriately.

What Are Your Options Now?

You deserve to be fairly compensated for your work. Getting mistreated by an employer is a violation of trust and likely illegal. By contacting an Arizona employment law attorney to handle your case, you are taking a step in the right direction. In many cases, workers do not even realize that they are not classified as employees until they file their taxes or get injured. An attorney can help you secure any wages you were denied and can help you work with the IRS to avoid paying double the Social Security and Medicare taxes than you should have.

Click here for information on leave of absence in Arizona.