Independent Contractor vs. Employee (Pennsylvania)
Why misclassifying a worker is one of the costliest mistakes an employer can make.
What's the difference between an independent contractor and an employee?
The difference comes down to control and independence. An employee works under the employer's direction and control; an independent contractor runs its own business and controls how the work gets done. The label the parties use does not decide it — the actual relationship does.
Why the classification matters
Classification drives taxes (withholding and payroll taxes), benefits and wage-and-hour obligations, workers' compensation and unemployment coverage, and liability for the worker's actions. Employees come with far more obligations, which is why misclassification is scrutinized.
The cost of getting it wrong
Misclassifying an employee as a contractor can lead to back taxes, unpaid overtime, penalties, and benefit claims — and Pennsylvania applies specific tests, including a stricter standard in the construction industry. Because the government uses its own tests, a business should classify based on those, not on convenience.
How Nochumson P.C. helps
Nochumson P.C. advises employers on worker classification and the agreements that support it. Contact us to review your classifications.
Related articles:
- Can You Fire an Employee Without Cause in PA? (At-Will Rules)
- Severance Agreements: What Employers Should Know
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