There are a lot of reasons an employer would prefer to classify a worker as a contractor rather than an employee. Independent contractors are not protected by most employment laws including those that prevent employment discrimination. They are not entitled to minimum wage, overtime, or workers’ compensation.
However, the label given by the employer does not determine the status of a worker. Instead, the determining factors are the level of control the employer has over the performance of the worker, where the work is completed, whether the worker performs similar work for other parties, and who pays the expenses associated with completing the work. Even if the work is governed by an independent contractor agreement and even if the employer does not withhold income taxes, the worker may still be an employee.
Consider speaking with a lawyer if you believe you have been wrongfully denied pay, benefits, or other protections solely because your employer informed you that you are in independent contractor.