Knowing whether you are an independent contractor or an employee in New Jersey is an important distinction, and one that can have a large effect on the benefits to which you are entitled. Here is a look at why it matters significantly whether you are driving as a contractor or as an employee in New Jersey:
Your Employer Does Not Have to Offer You Benefits If You Are an Independent Contractor
If you are classified as an independent contractor, then the company for which you work has no legal obligation to offer you benefits, such as a 401(k) or health insurance. On the other hand, employees usually do have a right to these benefit types.
You Are Not Entitled to Overtime Pay or Minimum Wage
Another major difference between independent contractors and employees is that the latter is entitled to overtime pay per the Fair Labor Standards Act, whereas the former is not. Additionally, employees are also entitled to at least the minimum wage. Independent contractors do not have be paid overtime or the minimum wage, which can be financially disastrous for these worker types. Independent contractors are also not entitled to paid time off.
Your Employer Will Not Pay Your Payroll Taxes
There is a big difference between the way that taxes must be paid by employees vs. independent contractors. When a person is classified as an employee, his or her employer is responsible for paying a percentage of his or her Social Security and Medicare taxes by withholding the taxes from the individual’s pay. For independent contractors, on the other hand, Social Security and Medicare must be paid by the individual in full, as well as income taxes that were not withheld. An employer may wrongfully classify an employee as an independent contractor in order to soften the employer’s tax burden.
Contact an Independent Contractor Attorney in New Jersey
If you are really an employee who has been wrongfully classified as an independent contractor, you need to remedy the mistake as soon as possible. At The Sattiraju & Tharney, LLP our New Jersey independent contractor attorneys can represent you during the process. Call us today or request a free case consultation online.