What are the laws concerning employee classification as employees or independent contractors?

In North Carolina, the laws regarding employee classification as either employees or independent contractors depend on the nature of the work being performed. Generally, if a worker is performing services that are essential for the operations of a business and is subject to the business’s control and direction, that worker is likely an employee. The reverse is true, if a worker is performing services that are not essential to the operations of the business and is not subject to the business’s control and direction, that worker is likely an independent contractor. Under the North Carolina Wage and Hour Act (N.C. Gen. Stat. 95-25.1, et seq.), employers are required to classify workers as employees or independent contractors based on their level of control over the work. If a worker is deemed an employee, the employer is responsible for providing certain benefits such as workers’ compensation, unemployment insurance, overtime wages, and minimum wage. Independent contractors, on the other hand, are not eligible for employee benefits and must pay self-employment taxes, such as the federal income tax. In addition, North Carolina employers are held to the same standard as federal law regarding employee classification. Employers must use the IRS’s 20-factor test when determining whether a worker is an employee or independent contractor. The 20-factor test examines the degree of control the employer has over the worker, the amount of direction the employer provides to the worker, and the worker’s investment in the business. Employers are also required to adhere to the Fair Labor Standards Act and the North Carolina Workers’ Compensation Act when determining employee classification. Overall, North Carolina employers must follow strict laws in determining employee classification in order to comply with the state’s wage and hour laws. Employers must carefully examine each worker’s level of control, direction, and investment in the business in order to properly classify them as either employees or independent contractors.

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What are the laws concerning employee classification as employees or independent contractors?

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