Human Resources 2008 Winter Edition
“Employee or Independent Contractor: A Distinction With a Difference”
There often is confusion regarding when an individual may be classified as an independent contractor and when he or she is actually an employee. In addition, because many employers do not fully understand the risk associated with misclassifying such individuals, they view the distinction as being without a difference. That can be a costly mistake: Whether the individual is improperly classified at the outset of the relationship or the nature of the relationship changes over time, the consequences of incorrectly designating a person who should be an employee as an independent contractor can be severe. That the independent contractor/employee classifications are indeed distinctions with a difference is demonstrated in legislation one state – New Jersey – recently enacted that imposes criminal liability for contractors in the construction industry that knowingly misclassify workers.