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SPLF Employment Blog

What You Need to Know as a Gig Worker

More and more Americans nowadays are beginning to transition into the gig economy, ranging from construction jobs to web development. Rapid development in technology is making it easier to make that transition, and it has led over a third of the American population joining the gig economy as independent contractors, seeking more flexible hours, independence, or simply extra income between jobs.

A gig-only employee is a worker who does a job for a client but isn’t necessarily employed by them. A gig worker typically has a set end date for a specified job and usually doesn’t use company resources. There are two types of gig workers: “independent” and “contingent.” Independent workers are typically self-employed, whereas contingent employees work for a specific company but don’t receive the benefits of full-time employment.

Tax Implications

For an independent contractor, taxes are handled a little differently. You must be prepared to pay federal income taxes, Social Security taxes, and Medicare taxes on your own. If you’re a gig worker, you’re required to file a tax return if your income is at least $400 per month. If applicable, you may have to get a tax registration certificate as well as a vocational license.

IRS Expectations

The IRS reviews the employment status of workers so they can be categorized as employees or independent contractors. Until proven as an independent contractor, the IRS automatically classifies a person as an employee.

To avoid IRS complications, it is imperative that a worker or hiring company applies for worker status determination with an SS-8 form. If a company has hired an independent contractor and has paid them $600 or more, they are required to fill out a 1099-MISC form with specified earnings and give it to that worker.

Legal Rights

As an independent contractor, you have rights when doing business that applies to you but not necessarily to regular employees. For example, you have the right to control how you do your work in order to fulfill the desired outcome for your client.

Of course, there are some exceptions to this, but they should all be in the form of a written and signed contract between you and your client. The provisions of this worker-client contract should also specify pre-agreed payment methods, as well as termination provisions if they wish to no longer use your services.

Federal Regulations

Because the relationship between gig workers and clients is purely contractual, provisions in the Fair Labor Standards Act do not apply to a gig worker. Furthermore, when a gig worker is self-employed, they are not subject to employment laws such as the Americans with Disabilities Act (ADA), Occupational Safety and Health Act, Unemployment Insurance, and Workers’ Compensation. An experienced employment attorney from the Spiggle Law Firm can help you evaluate whether you are classified as an independent contractor under federal regulations.

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