What is the difference between an employee and an independent contractor?

The difference between an employee and an independent contractor is an important distinction in wage and hour law in New Mexico. An employee is an individual who performs services for an employer and is treated as an employee of that employer for labor and tax purposes. An employee is generally required to comply with the employer’s instructions and policies, the employer typically provides the tools and materials necessary to complete the job, and the employer is responsible for withholding payroll taxes and providing benefits such as Workers’ Compensation insurance. An independent contractor is an individual who provides services to another individual or company and is treated as a self-employed business entity for labor and tax purposes. An independent contractor is not under the direct control of the employer and provides their own supplies and tools. An independent contractor is not subject to withholding taxes or benefits, and is responsible for their own taxes, including self-employment taxes. The hours the independent contractor works are usually flexible, and the contractor can often set their own rates and work for multiple companies.

Related FAQs

Are employers allowed to pay different wages for the same job?
What is the difference between a minimum wage and a living wage?
Are employers allowed to offer bonuses in lieu of wages?
Are employers allowed to pay tipped employees less than minimum wage?
What is the difference between overtime hours and double time?
Are there any exceptions to the minimum wage law?
Is it legal to dock an employee's pay for violating a policy?
What must an employer do in order to comply with wage and hour law?
What is wage and hour law?
What is the Family and Medical Leave Act (FMLA)?

What is the difference between an employee and an independent contractor?

Related FAQs

Related Blog Posts