An employee is a term for workers and managers working for a company, organization or community. These people are the staff of the organization. In general, any person hired by an employer to do a particular job in exchange for payment is an employee, but there are different kinds of employees. In some countries, employers are required by law to do certain things, like obey minimum wage laws, provide a safe workplace, and sometimes pay a tax. Employers also have to give their official employees benefits, like paying for health insurance. Because of this, some employers like to hire independent contractors to do work instead of regular employees. In the United States, a worker is an employee if their employer gets to tell them what do do, how to do it, and when to do it in a material way and an independent contractor if they get to make their own decisions about how to do what the employer wants.
Some employers like to hire independent contractors, or workers who are technically running their own businesses, because they do not have to follow all of the same laws. For example, in the United States, an employer has to some of the employee's social security taxes and the employee pays the rest. A self-employed person pays for all of his or her own social security taxes.
For example, if a company hires a plumber every time they need a leak or pipe fixed in their building, that plumber is an independent contractor. If a company hires a plumber to be part of their company, then that plumber is an employee. They must pay the employee plumber whether there are leaks to fix or not. They must obey any minimum wage laws that the country has. They must provide other things. But the employer gets to tell the employee plumber what to do and how to do it much more than an independent contractor plumber. They can make the employee plumber follow a dress code, while the independent plumber gets to wear what he or she wants. They can make the employee plumber come in or leave on a set schedule like other employees. The independent contractor plumber gets to decide when to come to work, usually by making an appointment with the employer.
Some companies like to hire independent contractors and then tell them exactly what to do and when to do it, like regular employees. They can get in trouble for this. In the United States, the Internal Revenue Service can sue companies that lie about whether their employees really are independent contractors.
- Charles J. Muhl (2002). "What is an employee? The answer depends on the Federal law" (PDF). Monthly Labor Review. Bureau of Labor Statistics. Retrieved July 16, 2020.
- "Misclassification of Employees as Independent Contractors". United States Department of Labor. Retrieved July 16, 2020.