Employment status

What is employment status?

Employment status is the classification of an individual’s work arrangement based on their employment status and relationship to their employer. The two most common classifications are full-time employees and independent contractors. Someone could also be classed as a part-time or temporary worker.

Employees are those who work under the direct control of the employer, following established work hours and using company resources. They are entitled to benefits, such as health insurance and retirement plans, and may be eligible for overtime pay.

Independent contractors, on the other hand, operate with more autonomy, maintaining control over their work schedules and methods and working to shorter-term contracts. They are responsible for their own taxes and do not receive benefits.

Failing to properly classify an employee can result in legal trouble. For example, it is considered to be “disguised employment” if an employer fails to provide benefits or pay the correct tax on an employee because they are classified incorrectly as an independent contractor. This can result in fines.

To ensure that all employees are properly classified, you can use an HR solution like Multiplier. We undertake tests that consider every aspect of the relationship to ensure that all workers are managed and paid correctly.