As an independent contractor living in California or working for a California client, you already know that the American workforce has undergone a substantial change in the past decade. More and more businesses hire independent contractors in lieu of or in addition to their own employees. But what does this distinction between employee and independent contractor mean for you?
As MBO Partners explains, as an independent contractor, you have no right to traditional employee benefits such as the following:
- Health or disability insurance
- Paid vacation
- Paid leave
- Paid sick days
- Company 401(k) or pension plans
Nor are you covered by Title VII of the Civil Rights Act of 1964 with respect to any type of employment discrimination. But just because you do not have employee rights such as these does not mean that you have no rights at all. You do.
Right to contract
One of your most important rights is the right to contract. You should always have a signed, written contract with each of your clients. This contract should set forth the following:
- The relationship between you and your client
- The type of project(s) on which you will work
- The pay amount you will receive for your work
- When you will receive your pay
- The conditions under which your client can “fire” you and vice versa
Should your client breach this contract in any respect, you have the right to sue.
As an independent contractor, you must pay all your own income and other taxes. Each of your clients must pay you the full amount of your pay, with no withholding for federal or state income taxes or Social Security and Medicare (FICA) amounts. At the end of each calendar year, each client must send you a Form 1099-MISC statement, with a copy to the Internal Revenue Service, setting forth the total amount it paid you during that year. Subsequently, it is your responsibility to file and pay your federal and state taxes, including both the employer and employee halves of the FICA amounts.
Right to run your own business
Perhaps the biggest right you have as an independent contractor is the right to run and manage your own business as you see fit. You have the right to work when, where and how you like, assuming, of course, that you meet any required deadlines for work completion.
This is general educational information and not intended to provide legal advice.