Don’t Know If Someone is an Independent Contractor? You Are Not Alone

Uber, the ride-share company, has ushered in – or at least brought to the front pages – the debate between classifying a worker as an independent contractor or classifying that worker as an employee . The distinction is significant for a host of reasons.

Indeed, in our new “gig economy” the difference between the two is important for workers and employers alike. And, it seems, we are currently in a state of flux with regard to what rule we should follow in order to make the proper classification. Most importantly, the difference between an independent contractor and an employee has enormous tax implications for both workers and employers.  

So, in this article, we thought that it would be high time to tackle the issue and give you the current “state of play” on what various government tax entities are doing on the issue.     

If, after reading this article, you find that you need some guidance for your own personal finances or your business as to the tax implications of classifying a worker as an independent contractor or employee, we welcome you to talk to an experienced tax law attorney in Florida like The Law Offices of Mary E. King, P.L. As tax law attorneys in Florida, we can make sure that your tax issues are resolved efficiently and at the lowest cost to you. Please fill out our online contact form , or call us at 941-906-7585 today.

There is a lot of chatter around the idea of being an Uber driver, or another type of freelancer in the gig economy. As gig workers we get to be our own boss. We get to set our own hours. We get to do things in the way that we think they should be done, rather than following someone else’s formula.  

Indeed, the kind of autonomy and flexibility gig work provides really sparks our entrepreneurial selves, and offers a way to possibly balance work and family in a manageable way. 

That being said, being a gig worker, or independent contractor, has its drawbacks. Most likely, you will need to work with no benefits, and the pay might not be stellar. Also, there are no paid vacations. If you do not work, you do not get paid.  

Being an employee, on the other hand, has some perks. There is at least some minimal stability as an employee, i.e., it is highly unlikely that you will face the fear of being fired every day. Also, there are a number of benefits from offers of health care plans, to overtime pay, to unemployment benefits if you do get laid off.  

But, as noted above, being an employee lacks the kind of flexibility and “being your own boss” feeling that you get as a gig worker.  

In sum, there are pros and cons to both. It is just a question of where you are in your life and what you want to accomplish.

One thing that is rather fascinating about the gig economy debate is that the competing interests do not fall neatly along traditional progressive vs. conservative lines.   

On the one hand, some (such as gig workers like Uber drivers) want the added benefits (overtime, benefits, etc.) that come with being classified as employees. That fight for employee rights is part of the motivation behind some government tax entities classifying as many people as employees as they can.

On the other hand, others find favor with the freedom and independence that comes with being an independent contractor, even if that means very few benefits, and low overall compensation for the actual workers. Further, it is also much cheaper for businesses to employ independent contractors rather than employees.

So, how will the balance be struck?

Very recently, California passed a law that is intended to help hundreds of thousands of independent contractors become employees, which will allow them to earn a minimum wage, get overtime pay, and additional benefits.

However, a debate quickly sparked surrounding who would be covered by the law. One of the main targets of the legislation, Uber, stated that the law does not apply to its drivers.

Yet, the worry about the IC/employee distinction goes way beyond Uber. Some religious groups worry that small houses of worship will not be able to afford making rabbis and pastors employees. Franchise owners also feared that they would be swept into the law, having to pay into the unemployment fund for California. Other workers in limbo include, nail salon workers, janitors, and construction workers.  

In sum, the kind of uncertainty swirling in California is taking place in other states as well. 

Taxes can be a challenge, particularly regarding whether a worker is an independent contractor or employee. If you are a gig worker, or you employ them, you will need to get some advice on the state of the law by a seasoned tax law attorney in Florida. Mary E. King has spent her career concentrating in tax law and can help you with such questions in Florida and elsewhere. Attorney King has a wealth of information about what types of options would make the most sense for you and your business.

That helps explain why her tax law firm in Florida received an A+ rating from the Florida Better Business Bureau. If you have a tax related issue – no matter how small or how large – setting up an initial consultation with Mary E. King, tax attorney of Florida, is the first step you should take towards relief.

The Law Office of Mary King P.L. offers complete IRS problem solving services including all areas from tax debt settlement to planning the most efficient tax strategy for individuals and businesses. Call us today to schedule an initial consultation. With years of experience as a tax law firm in Florida, Attorney Mary E. King can make sure that your tax issues are resolved in your favor. Fill out our online contact form , or call us at 941-906-7585.