Two in five workers will be independent contractors by 2020, according to one study. That’s an estimated 60 million of us toiling without the restrictions (or benefits) of full-time employment.
The downside, of course, is that this freedom isn’t necessarily free: For every freelancer you meet who shrugged off the shackles of Corporate America and struck out on his own, you’ll meet several who were forced into part-time, contract, or temporary work by the economy. And, regardless of how you became a freelancer, working on your own means going without even the illusion of job security, as well as common benefits like health insurance, retirement plans, and paid time off.
If you’re a freelancer, though, the first question to ask isn’t whether you adopted the lifestyle on purpose, or even if it suits you — but rather, are you really a freelancer in the first place? If you work for one primary client, and that client can dictate the terms of your work… the answer might well be no. In this worst-of-both-worlds scenario, you’re treated like an employee, without receiving any of the benefits.
In determining whether a worker is an employee or an independent contractor, the IRS and the Department of Labor are concerned primarily with two things: control and independence.
The IRS offers three common law rules that establish whether or not a worker is an employee:
- Behavioral: Does your employer/client control your work, and the way in which you do it?
- Financial: Are the business aspects of the job controlled by the entity that pays you? For example, does the company provide the supplies and equipment you use to do your job?
- Type of relationship: Does the work continue on an ongoing basis, or do you do a certain amount of work by a certain date and time? Does the company provide sick time, vacation time, and benefits like health insurance or retirement plans?
Now, meeting some of these criteria doesn’t necessarily mean that you’re an employee, and not meeting some of them doesn’t mean you’re a contractor. Only an employment attorney can really tell you whether or not you’re secretly an employee, by legal standards.
Forget legal standards for a minute. What about practical ones?
Independent workers who want to stay independent need a few things—enough money to live on, but also autonomy, satisfying work, and the ability to combine making a living with living a life.
The financial piece is obvious: If you’re forced to work 80 hours a week, indefinitely, to make ends meet, you’ll probably find yourself crawling back to the cubicle farm sooner rather than later. Ditto if you can’t find enough work to sustain yourself.
Autonomy is a less obvious requirement for a successful, long-term freelancer, but it’s equally important. If you have to work regular hours, from 9 a.m. to 5 p.m. (or so), five days a week, and your boss can tell you when to jump and how high… you’re not a freelancer in spirit, regardless of what the law says.
Truly independent workers control their time and work, to the extent that they can decide to change their hours, graciously decline a project, or rearrange their priorities without asking for permission from another person or business. That doesn’t mean that you won’t be working regular business hours most days, or that you’ll want to get in the habit of saying no to requests from paying clients — being reliable and available is essential for anyone who’s running their own business. But if you don’t feel like you can say no — even if you want to — you’re not really independent.
In short, if you can’t take an afternoon off now and then or switch your projects around without getting the thumbs up from someone else, you’re probably not a true freelancer — but rather a contracted employee in a precarious position.
Note: This post is provided for informational purposes only and doesn’t constitute legal advice. If you think there’s a chance that you’ve been misclassified as a freelancer or contract worker, consult with an employment attorney to learn your rights.
Related Articles:
- The Ultimate Freelancer’s Guide to Getting Jobs, Getting Paid, and Getting Ahead
- Don’t Try This at Home: You Are Not Going to Make Money With These Five Side Hustles
- Do You Hate Your Job — or Your Boss?
- Why Freelancing Can Be Safer Than a 9-to-5 Job
The post Are You a Freelancer… or an Exploited Worker? appeared first on The Simple Dollar.
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