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 ?
Independent contractors can be freelancers, subcontractors or workers hired through a staffing or employment agency
Largely driven by the gig economy, studies show that by 2020 at least 40 percent of all workers will be independent contractors, as opposed to traditional employees.
Plaintiffs in the class action had alleged that American Family avoids complying with the Employee Retirement Income Security Act of 1974 (ERISA), the federal law that protects retirement benefits, by improperly classifying its agents as independent contractors when they are actually employees.
You are not, however, required to provide these types of benefits to independent contractors.
[When a [person] [facility] undertakes to perform services, [he] [she] [it] cannot transfer the obligation to perform those services to an independent contractor and remains responsible for the negligence of [his] [her] independent contractor.]
Nelly first argued that it was entitled to the Section 530 safe harbor because, in a previous audit, the IRS had signed off on the independent contractor classification, thus qualifying the company for the Section 530 safe harbor.
In the past decade or so, several state and federal agencies--including the IRS--and have cracking down on companies claiming to use independent contractors who in reality perform like employees of the company.
However, the disadvantages to the worker classified as an independent contractor are numerous.
Tells you the types of documentation you'll need as evidence that your independent contractor meets the test.
* Entering into an independent contractor agreement or hiring a business entity rather than a person does not necessarily protect a business from liability.
In addition, many employers have opted to reclassify their independent contractors as employees -- to reduce liability or to improve the workforce.
Contractor Management Services LLC ?is a leading independent contractor management solution provider, and has worked with hundreds of contracting companies and tens of thousands of independent contractors throughout North America.

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