Independent Contractor vs. Employee

by Stevie Hall*

 

Graduation in your future? SHSU is holding a Seniors Only Fair, Thursday September 27, 2012 from 11 to 1 PM in the LSC Mall area just for YOU!

Among the booths there, Student Legal Services will be address many questions common to graduating students. One example, “If an employer says they want to hire you as an ‘independent contractor,’ what does that mean?” So, what does it mean if an employer wants to hire you as an “independent contractor?”

  • First and foremost this means you are running your own business, however, the payment (which is not a wage) comes from the employer with whom you have an agreement. For example, let’s say you’re an independent DJ and you were just hired by a night club. The club would tell you which nights they wanted you and rate, say $350 a night. If you agree, you DJ the nights they permit you to work, and get paid the full rate.
  • This might sound like a great idea, however, since payroll taxes are not deducted from your check, you are responsible to set aside and pay all taxes on your wages. This means you are even responsible for the portion of social security tax an employer would usually pay on your behalf (totaling 15.3% of income) – because, after all, you are in business for yourself and are now your own employer.
  • As an independent contractor, you have the flexibility to add jobs at other clubs or do private parties and potentially you could make a lot of money. However, be sure you understand your tax liability and are ready to embark on a business before accepting such a position.

This, along with many other practical questions will be addressed and answered at the fair. Come learn the rights you have when it comes to future employment, loan repayment and career opportunities. Hope to see you there!

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