I'm A Freelancer, Gigger, Contractor in A Gig Economy

We live in a time where not everyone has one full time job or traditional full time hours. Some have a full time job and still need to supplement their income with additional contract work in order to survive. Some are doing a side gig that is closer to their dream and can’t wait to phase out their full time job. Some do multiple part time jobs. Some do all freelance work. The options are quite varied.

Independent Contractor vs. Employees?

From an IRS stand point, “Worker classification is important because it determines if an employer must withhold income taxes and pay Social Security, Medicare taxes and unemployment tax on wages paid to an employee. Businesses normally do not have to withhold or pay any taxes on payments to independent contractors.” Irs.gov

From a work standpoint an independent contractor relationship vs. employer/employee is often determined by a variety of factors. When someone is an independent contractor typically the work is temporary, not permanent. He/She/They often provide the supplies and materials instead of an employer. A contractor has more freedom controlling their work hours. For example, they can work 9am-5pm if they choose, but they may also work flex hours or 11am-8pm some days.

From a liability standpoint, an employer is responsible for the acts of their employees. Whereas an employer is not necessarily in charge of their contractors, unless they are performing actions which if something bad happens, an employer cannot delegate liability (ie.security and safety measures).

Good old Wikipedia does a great job at explaining that, “ Employers are vicariously liable, under the respondeat superior doctrine, for negligent acts or omissions by their employees in the course of employment (sometimes referred to as 'scope and course of employment').[3] To determine whether the employer is liable, the difference between an independent contractor and an employee is to be drawn.”

Difference between freelance, gig, and contractor?

If you are not an employee, you are most likely an independent contractor. A freelancer, gigger, or contractor are typically all types or labels of independent contractors. A freelancer may prefer to call themselves a freelancer as it implies they are accepting more than one contract at a time. A gigger's work may be more informal but that’s not always the case. Some times bands who have serious contracts still call their work gigs. Contractors are anyone who is not an employee who typically has an independent contractor agreement with another.

Because all of these names and others get thrown around, it’s important to know what they mean to you and the people you work with. The most important distinction in naming what you do and communicating this to others involve the following questions: Am I an employee or an independent contractor? Do I have a contract? What sort of liability do I have vs. what liability does my employer or company hiring me for work have? Do I own my work or my product or does my employer or the company hiring me?

Why Should You Care?

Depending on what status your staff is if you are an employer or hiring company will determine if they have liability for actions or you do. For either party, it will determine freedom of work choices. It will determine pay structures and possible contract breach solutions. It will affect taxes and other financial planning and processes. If you are an employee or independent contractor you can expect different things depending on your status. If you are an independent contractor, you can ask for an agreement in writing even though you’re not an employee. And, you can still negotiate for the terms you want to see in this agreement. Those are just a few reasons why you should care, but several exist.

The IRS website has a helpful Independent Contractor vs. Employee Test. Here's the link: https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee

At Rational Unicorn whether you are the one hiring or the one doing the work (or sometimes both), we can advise you on various work roles and contractual agreements that should be in place for all involved. Contact us today for a no cost 30 minute consultation.


Michael Jonas