Depending on the industry or field of work, companies may hire employees or independent contractors (often called freelancers) or even a combination of both. Although either type of worker may perform similar job duties, it is important to understand the distinction between them as an employer. The federal Fair Labor Standards Act (FLSA) considers several factors to determine whether a worker is designated as an employee or an independent contractor. Some of the main differences between these types of workers include how they are paid, taxes, and insurance benefits. Every business is unique, and what works for one company may not work for another. If you are an Illinois business owner, it is imperative that you understand the laws and how they relate to your employees. In some situations, utilizing independent contractors may benefit your business in the long run.
One of the major benefits of using independent contractors versus salaried employees is the cost savings. As a business owner, when you hire a worker who is classified as an employee, you have to pay additional expenses that you would not pay for an independent contractor. These costs include the following:
In some cases, a company may only need workers for certain periods of time throughout the year. During these “busy times,” an employer can hire personnel based on fluctuating workloads. This alleviates having regular employees sitting around doing nothing during the “slow times.” In addition, independent contractors or freelancers may possess special skills or knowledge related to a project, reducing the time spent training newly hired employees. Using freelancers can also help you avoid potential lawsuits that can accompany layoffs or firings, since it is considered “contracted” or temporary work.
In terms of liability for wrongful termination or other matters such as workplace discrimination or sexual harassment, salaried employees have several rights under state and federal laws. This means they can pursue legal action against their employers if any of these rights are violated. Independent contractors are not protected by many of these laws; therefore, they cannot sue you for violations unless stipulated in their contract. Another benefit of using freelancers is that it provides employers a chance to make sure the workers are the right fit for a company before hiring them permanently.
Running a business, regardless of size, can be complicated and challenging. Whether you retain salaried employees or hire independent contractors, it is important to consult with legal professionals to make sure you are not violating any workers’ rights. The Miller Law Firm, P.C. is well-versed in all aspects of Illinois employment law, and we can advise you on legal matters that pertain to your line of work. Contact one of our skilled Schaumburg, IL employment lawyers to discuss your business practices. To schedule your free consultation, call our office today at 847-995-1205.