Should I sign an independent contractor agreement?

If you were hired as an employee, don't agree to be treated as a contractor.


I just started a new job in the quality assurance department of a software company. I filled out an employment application, went through interviews, and accepted the position thinking I would be an employee. Now, they want me to sign an agreement saying that I'm an independent contractor. I won't get benefits, and they won't withhold payroll taxes. But I'll be working at their office, 40 hours a week, under their supervision. Am I really an independent contractor?


It sounds like you are an employee, not an independent contractor -- and that means you should not sign an independent contractor agreement.

Different state and federal agencies use different tests to figure out whether a worker is an employee or an independent contractor. But all of them are trying to answer the same question: Is the worker truly running an independent business, of which the employing firm is one customer, or is the worker an employee? The more the employing firm has the right to direct the details of the work -- how, when, and where it's done -- the more likely the worker is an employee. So, the fact that you have to work 40 hours a week at the employing company's premises, under their supervision, strongly suggests that you are an employee.

If you were hired to do a discrete project, the outcome might be different. For example, if the company hired you to design its website or automate its accounting system, you would likely have to spend some of your time working on site, and according to the company's specifications. However, it would be up to you to decide how best to do the job. And, once you were finished with the project, you would move on to the next gig.

Workers who are hired to provide services that are an integral part of the employing company's business are also more likely to be classified as employees. It sounds like you were hired to do ongoing quality assurance work -- testing the software products as they come out to make sure they work in the way they are supposed to work. This is an integral part of a software company's business. A true independent contractor is typically hired to perform a job that is outside of the company's expertise, whether it's upgrading the electrical system, painting the office, building the company intranet, or running the company cafeteria service.

Because you are not an independent contractor, you shouldn't agree to be treated like one. Some workers initially enjoy their contractor status, especially because they won't be subject to payroll withholding. However, this just means you'll have to pay your income taxes quarterly, and you'll have to pick up the full tab for your Social Security and Medicare taxes (as self-employment taxes). You won't get benefits, you won't get unemployment compensation or workers' compensation benefits, and you won't be protected by myriad workplace laws that prohibit discrimination, guarantee the minimum wage and overtime, and so on. Simply signing an independent contractor agreement doesn't turn you into a contractor, but it will make it a bit more difficult to prove that you were really an employee, if you run into trouble.

To learn more, see Nolo's article on Employees vs. Independent Contractors.

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