Employee Classification

Employee classification refers to how workers are categorized based on their employment status, mainly as either employees or independent contractors. This classification affects things like taxes, benefits, and legal protections. Employees typically receive benefits, such as health insurance and overtime pay, and have taxes withheld from their pay. Independent contractors work freelance, manage their own taxes, and aren’t entitled to certain employee benefits. Correct classification is important for legal compliance and financial reasons, as misclassification can lead to legal penalties and financial liabilities.