independent contractor

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independent contractor

One who is hired to reach a certain goal or perform a certain task,but who has the ability and the right to determine the methods and times for reaching that goal or task,so long as it is not illegal and is within the limits of the contract.This is an important concept because

1. Employers must take withholding taxes and pay matching taxes for employees but not independent contractors. The IRS has significantly tightened the definition of indepen- dent contractor so that most work relationships do not qualify. Under certain circum- stances, real estate agents have been held to be employees for tax purposes.

2. If an independent contractor is negligent or commits an intentional tort, then the person who hired the contractor is not generally liable for the resulting damage. If an employee did the same thing, the employer would be liable so long as the employee was acting within the line and scope of his or her employment, which is usually a fairly easy hurdle for plaintiffs' lawyers to overcome.

3. An exception exists for the general rule of nonliability for the actions of an independent contractor, and that is in the area of real estate brokerage. Most real estate agents are independent contractors working for the broker. Real estate licensing laws, however, usu- ally hold the broker responsible for the actions of agents.

Independent Contractor

A taxpayer who contracts to do work according to his own methods and who is not subject to control except as to the results of such work. An employee, by contrast, is subject to the control of the employer as to the methods to be used to obtain the desired results.
References in periodicals archive ?
on the Internal Revenue Service's revised training materials for distinguishing between independent contractors and employees ("Worker Classification").
The IRS can also conduct an audit of your business for corporate tax purposes and, as part of that audit, question the status of all independent contractors with whom you do business.
For a more detailed discussion of Revenue Ruling 87-41 and IRC Section 530, see Barry Frank and Jeffrey Cooper, "Real Estate Appraisers: Independent Contractors or Employees?
The level of skill required by the worker: Independent contractors normally possess skills that are unique and greater than the recipient's regular employees.
The property management firm must decide whether workers in these employment relationships are employed as independent contractors or employees.
This ruling is a victory for everyone in the motor carrier industry that relies on independent contractors to satisfy fluctuating demand.
Thus, production operators may be found "jointly and severally liable" for the hazardous conditions created by their independent contractors even when they are not aware of the existence of a violation and are not supervising the day-to-day work.
The existing 12-part test used to determine whether an individual is an employee or an independent contractor under wage and hour, the whistleblower and workers' compensation law, has been replaced with a new seven-part test.
While the unique liabilities and exposure to loss of independent contractors are complex, I an appropriate insurance solution can be effectively structured at a modest cost.
On 1 March 2007, the Independent Contractors Act 2006 (Commonwealth) came into force setting out rules covering independent contractors.

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