The average person might think the only difference between being an independent contractor and an employee is that an independent contractor does not get benefits such as sick days, vacation, and medical insurance. Many may not be aware that independent contractors also lose the benefit of being protected by labor laws. If a company decides not to pay or goes bankrupt, the contractor would need to file suit in court for breach of contract, or stand behind the company’s other creditors whereas the employee has certain bankruptcy payment protections, and the ability to file a wage claim with the Department of Labor. When companies these days hire fewer direct full time workers, and depend more on independent contractors, freelancers should be aware of the protections from statutes and regulations that they give up in this new definition of work.
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