As the costs of hiring an employee increase, businesses are looking more into independent contractors as a way to build staff. Working as an independent contractor--which is really self-employment--has its advantages but is often misunderstood and sometimes abused. A savvy independent contractor knows his rights as a self-employed worker and will defend those rights.
Industries Using Self-Employed Workers
The construction industry uses independent contractors, as do trucking companies and delivery services, janitorial services, beauty salons, taxi companies and some high-tech industries.
A self-employed worker should change her employee mindset if she wishes to succeed as an independent contractor. She is not an employee of the company; instead, the company is her customer.
At bottom, a self-employed worker has the right to work in any manner he sees fit to get the job done, as long as it's legal. An independent contractor also has the right to turn down work or subcontract it out. A company cannot hold an independent contractor to a dress code or rules of conduct and cannot fire an independent contractor.
A self-employed worker has the right to seek additional work elsewhere, as he is not bound to the company using his services. An employer may legally implement a non-competition clause in the contract, although it is usually active for a set time and limited to a certain geographical region.
Time and Place
Independent contractors set their own working hours and can work as many or as few as they wish. They also have control over what to charge for their work. Because the independent contractor can do her job in her own style, she can work at home.
An independent worker loses some benefits. He does not have worker's compensation coverage or unemployment insurance. He is on his own for medical insurance and has to plan how he will pay his taxes. He pays for most of the supplies he needs to do his job. Unlike salaried or hourly workers, he loses any guarantee that he will make money. And he may work for less than the federal minimum wage.
Abuses in the System
Companies will look at the advantages of using independent help--no benefits, overtime pay, or worker's compensation but ignore some of the disadvantages. According to independent contractor law, a company cannot exercise the same control over the self-employed worker as it can over an employee. The company cannot even make a schedule for an independent contractor. In 2007, 10 million workers were classified as independent contractors, but the General Accounting Office said that 30 percent of the companies using these workers misclassified them.