Employees are covered by a number
of federal and state labor laws
A potential employee completes an
application that is handled by
Human Resources. The approved
applicant receives a job offer.
After a person accepts the position,
the employer must ask for
additional information about the
employee such as date of birth,
marital status, and citizenship
Provides name, address, Social Security
number, tax filing status, and number
of exemptions on a W-4
Reports all money paid to the employee
during the tax year on a W-2
An employee can be discharged at any
Employees can quit their jobs at any
time without incurring liability
An employee hires, supervises and pays
workers at the direction of the employer
(i.e. acts as foreman or representative of
Employees comply with instructions
about when, where, and how the work
is to be performed.
Employees are trained to perform services
in a particular way. They are required to
take correspondence courses and attend meetings. Other methods also indicate
that the employer wants the services performed in a particular way.
Services of an employee are merged into
the business. Success and continuation
of the business depends upon these
services. The employer coordinates work
with that of others.
Are not covered by employment and labor laws
A potential contractor normally interacts with the person or department that wants a certain service or task completed. A potential contractor might complete a proposal. The contractor enters into a contract, including a Statement f Work with legal or procurement section of the business.
Provides name, address, Taxpayer Identification Number, and certification about back up withholding on a W-9
Reports payments of $600 or more in a Calendar year Form 1099
Contractors cannot be fired as long as the product results meet contract specifications
Contractors agree to complete a specific job and are responsible for satisfactory completion; or they are legally obligated to make good for any failure
Contractors hire, supervise and pay other workers as the result of a contract. A contractor agrees to provide materials and labor and is responsible for the results.
Contractors set their own hours and do the job in their own way.
Contractors use their own methods and receive no training from the purchaser of their services.
The success and continuation of the business aren’t dependent on the services provided by the contractor.