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Employment law

independent contractors

An independent contractor (also known as a freelancer) is a person or entity who agrees to work for another person or entity as a nonemployee. Because of the independent contractor’s status as a nonemployee, the contractor must pay their own Social Security and Medicare (FICA) taxes. And the person or entity hiring the independent contractor has no obligation to withhold income taxes from the contractor’s fees. It is important for the person or entity who hires a worker to properly classify the worker as an employee or as an independent contractor based on the IRS’s right-to-control test.

In Maine, as in other states, the distinction between an independent contractor and an employee is significant for tax and legal responsibilities. Independent contractors in Maine are responsible for paying their own Social Security and Medicare taxes, as they are not considered employees. The hiring party is not required to withhold income taxes from payments made to independent contractors. Proper classification of a worker as an independent contractor or an employee is crucial and is determined based on the IRS's right-to-control test, which assesses factors such as the degree of control over the work performed and the financial aspects of the worker's job. Misclassification can lead to legal consequences and penalties. It is advisable for both parties to clearly understand their roles and obligations under this classification to ensure compliance with state and federal laws.

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Employment law

independent contractors

Individual & Family Legal Plan

Articles

Maine State Code

Maine State Code

Employment law

independent contractors

Articles