Are you a contract employee or a regular employee?

Texas workers should take some time to find out if they are actually employees or contractors. This is an issue that affects their employment rights, wages and benefits. For many workers, the line becomes blurred when their employers misclassify them. Employers often do this to avoid paying certain taxes and to cut back on their labor expenses. The following criteria can help workers to determine their employment status:

Exclusivity

People who work for an employer who mandates they cannot work for another company that offers similar services and products are employees. Contractors run their own businesses and essentially work for themselves. They offer their services to companies and can usually work for any person or company they want. Of course, some contractors may enter into non-compete agreements with their clients.

Provision of work equipment

Employers provide and maintain equipment and software for their workers to use on the job. Depending on the worker's job title and responsibilities, he or she may take work equipment, such as a laptop, upon leaving the job site. Contractors have to furnish their own work equipment or the majority of it. They are also responsible for maintaining it.

Work schedule

Employees have set schedules and destinations. They must act and perform their work according to company policies. They must be onsite by a certain time and remain there for a set amount of time. They must complete a set number of hours per week and pay period. Freelancers and contractors have flexibility in how, when and where they complete their work. They can complete everything on their own time as long as they honor the deadlines in their contracts.

Compensation

Pay for employees is usually a predetermined amount. Employees are paid regularly on a weekly, bi-weekly or monthly basis for their work. Taxes and any contributions for benefits are taken out of their checks by their employers. Full-time employees who work more than their required hours should receive overtime pay from their employers. They also receive W-2s at the end of each tax year that show how much they earned. Freelancer compensation is dependent on job completion. Contractors are responsible for paying their own taxes and receive 1099s from the companies they contracted with each year.

It is important for workers to know what their employment classification is. The distinction can have a significant impact on your tax situation, standard of living and rights. If you are dealing with a situation where your employment status is unclear or other some other related consequences, you should discuss your situation with an attorney.