Are You a W-2 Employee or Independent Contractor?

Depending on your job, your employer will classify you as an W-2 employee or independent contractor. See the key differences between the two classifications and how they will affect your job search.

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What Are the Differences Between a W-2 Employee or an Independent Contractor? Here’s What to Know

Depending on your job, the company you work for will classify you as an employee or independent contractor. There are several key differences between W-2 employees and independent contractors, also known as 1099-MISC workers. For example:

Tax form requirements

Employees and independent contractors have different forms that are used when filing taxes: a W-2 or a 1099-MISC. Knowing the key differences between whether you are a W-2 employee or an independent contractor will make filing your taxes simpler. The primary tax difference between the two types of workers is who is legally responsible for withholding and paying required taxes.

  • Self-employed independent contractors file a 1099-MISC form. Their Social Security and Medicare taxes are not withheld for them. Instead, they are responsible for “withholding” and paying self-employment or “SE” tax.  Independent contractors also pay both the employer and employee shares of Social Security and Medicare taxes.
  • W-2 employees, however, have a percentage of each paycheck withheld by their employer. And a portion of their employment taxes are paid for by their employer.

Job functions

Companies will often give W-2 employees specific duties, tools and methods to complete tasks. The work process will be defined by the company and training is provided by the company to its employees.

However, independent contractors are required to find jobs themselves, create their own contracts and manage their own tax withholdings and payments.  They also often provide their own tools, impacting the amount of money they make.

Payment methods

W-2 employees are paid set wages. Additionally, they may be eligible for incentives provided by the employer.

On the other hand, payments to independent contractors are set through various contracts with the companies they work for, depending on the types of work they perform.

Relationship with employer

W-2 employees are often hired indefinitely for ongoing, consistent work. They are also afforded protections under the law, such as minimum wage, overtime, and family and medical leave.

Meanwhile, independent contractors agree to work for an employer for a specific period of time and are not afforded the same legal protections as employees. When the contract ends, independent contractors must find more jobs or projects on their own.

WORKING TEMP JOBS AS A W-2 EMPLOYEE WITH PEOPLEREADY

Many of today’s job seekers are finding part-time or temporary jobs through a staffing agency that classifies them as W-2 employees. While employers set the schedule, you’ll decide what jobs you’re interested and which schedule benefits you the most.

PeopleReady is the best way to find part-time or temporary jobs that fit your needs. Most of our jobs offer daily or weekly pay. In order to search for jobs, just download our app, JobStack, onto your smartphone from the Google Play Store or the Apple App Store. Or you can search current jobs and apply right on your website. Learn more here.

PeopleReady is active in all 50 U.S. states, so JobStack gives you access to available jobs in your local area whenever works for you. For example:

Looking for jobs in your area?

PeopleReady, a TrueBlue company (NYSE: TBI), specializes in quick and reliable on-demand labor and highly skilled workers. PeopleReady supports a wide range of industries, including construction, manufacturing and logistics, waste and recycling, and hospitality. Leveraging its game-changing JobStack staffing app and presence in more than 600 markets throughout North America, PeopleReady served approximately 83,000 businesses and put approximately 226,000 people to work in 2022.