Independent contractors versus employees: the costs and benefits for your practice

Every business is interested in reducing costs. Payroll and employee benefit costs can be reduced through the use of independent contractors, because they are not employees to whom training, overtime wages, and benefits must be provided. Using the services of an independent contractor presents some disadvantages, however, as an independent contractor cannot be controlled and disciplined in the same fashion as an employee. There are a variety of tests applied under various statutes to determine whether an individual is an employee or an independent contractor, and it is important to carefully analyze all of the facts of a given situation in light of these tests before entering into an independent contractor relationship. If you engage an individual as an independent contractor, and that individual is found to actually be an employee, your business may be subject to significant financial penalties.