Independent contractor

An independent contractor is a natural person, business or corporation which provides goods or services to another entity under terms specified in a contract or within a verbal agreement. Unlike an employee, an independent contractor does not work regularly for an employer but works as and when required, during which time she or he may be subject to the Law of Agency. Contractors often work through a limited company which they themselves own, or may work through an umbrella company.

In the United States, any company or organization engaged in a trade or business that pays more than $600 to an independent contractor in one year is required to report this to the Internal Revenue Service (IRS) as well as to the contractor, using Form 1099-MISC. [See generally usc|26|6041 and 26 C.F.R. sec. 1.6041-1.] [Sample form 1099-MISC [] ] This form is merely a report of monies paid; independent contractors do not have income taxes withheld from their pay as regular employees do. When computing taxable income on the federal income tax return, the independent contractor can deduct, from his gross income amount, the amount work related expenses, such as tools or safety gear needed for the work that were purchased by the contractor himself.

Independent Contractor versus Employee

Sometimes, it is not a straightforward matter to determine who is an independent contractor and who should be classified as an employee. To make a determination, the IRS advises taxpayers to look at three aspects of the employment arrangement: financial control, behavioral control, and relationship between the parties [ IRS Frequently Asked Questions about form 1099-MISC [] ] . While some independent contractors may work for a number of different organizations throughout the year, there are also many who retain independent contractor status even though they work for the same organization for the entire year.

Generally speaking, independent contractors retain control over their schedule and number of hours worked, jobs accepted, and performance of their job. This contrasts with the situation for regular employees, who usually work at the schedule required by the employer and whose performance is directly supervised by the employer.

Examples of occupations where independent contractor arrangements are typical:

* General Practitioner
* Taxi cab drivers
* Lawn care workers
* Freelancers
* Entertainers
* Professional Wrestlers
* Newspaper Carriers

An independent contractor in tort

The employer of an independent contractor is generally not held vicariously liable for the tortious acts and omissions of the contractor, because the control and supervision found in an employer-employee or Principal-Agent relationship is lacking. However, vicarious liability will be imposed in three circumstances:
#where the contractor injures an invitee to the real property of the employer,
#the contractor is involved in an ultra-hazardous activity (one likely to cause substantial injury, such as blasting with explosives), or
#the employer is estopped from denying liability because he has held out the independent contractor as if he were simply an employee or agent.


ee also

*Performance bond
*General contractor
*Contingent Workforce
*Real estate trends
*Inside contracting
*Misclassification of employees as independent contractors

External links

* [ Independent Contractor Rights]

Wikimedia Foundation. 2010.

Look at other dictionaries:

  • independent contractor — n: one that contracts to do work or perform a service for another and that retains total and free control over the means or methods used in doing the work or performing the service compare employee Merriam Webster’s Dictionary of Law. Merriam… …   Law dictionary

  • independent contractor — UK US noun [C] (ABBREVIATION IC) TAX, LAW ► a person or company that supplies goods or services to another company: »An employer is free to use the services of employees or independent contractors. → Compare EMPLOYEE STATUS(Cf. ↑employee status …   Financial and business terms

  • Independent Contractor — A self employed taxpayer that controls his or her own employment circumstances, including when and how work is done. Independent contractors are not considered to be employees and must pay their own Social Security tax. It is up to the employer… …   Investment dictionary

  • independent contractor — Generally, one who, in exercise of an independent employment, contracts to do a piece of work according to his own methods and is subject to his employer s control only as to end product or final result of his work. Hammes v. Suk, 291 Minn. 233,… …   Black's law dictionary

  • independent contractor — One who, exercising independence in respect of his choice of work to be performed by him, contracts to do or perform certain work for another person according to his own means and methods, without being subject to the control of such other person …   Ballentine's law dictionary

  • independent contractor —    A person who is hired (i.e., contracted) to work for another to do a specific job, and who retains control over how the job is done. Such a contractor does not qualify as a statutory employee under the day to day control of the employer (i.e …   Business law dictionary

  • independent contractor — noun A person working independently, under a contract; a self employed person …   Wiktionary

  • independent contractor — /ɪndəˈpɛndənt ˌkɒntræktə/ (say induh penduhnt .kontraktuh) noun a person who undertakes to perform work for another for a consideration and who, unlike an employee, retains control in the performance of it, subject only to the terms of the… …   Australian English dictionary

  • independent contractor — noun : one that contracts to do work or perform a service for another and that retains total and free control over the means or methods used in doing the work or performing the service …   Useful english dictionary

  • contractor — con·trac·tor / kän ˌtrak tər, kən trak / n: one that contracts: as a: one that contracts to perform work or provide supplies b: one that contracts to erect buildings Merriam Webster’s Dictionary of Law. Merriam Webster. 1996 …   Law dictionary

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