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The type of agreement between the hiring and the hired party will determine the status of the worker and how they’ll be taxed. If the worker is an employee of their employer’s business, they will be entitled to employee benefits and a portion of their wages will be withheld by the employer to cover employment taxes. If the worker is a freelancer, they are defined as an independent contractor and will be required to file and pay taxes as a self-employed individual.
Contents |
Types (2)
Independent Contractor Agreement – A work agreement between a freelancer and a client.
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Subcontractor Agreement – Used when a subcontractor is hired by a contractor or authorized subcontractor to work on a project.
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Laws
- Labor Statutes: Chapter 408 (Labor)
- Definition of Employee: § 418.161
- Minimum Wage: $10.10/hr (§ 408.934(i), Dept. of Labor and Economic Opportunity)
- Overtime: One and a half (1.5) times the regular hourly pay (§ 408.414a).
- Record Keeping: Employers must maintain employee records for at least three (3) years (§ 516, Act 397).
At-Will Employment
Permitted? Yes, employers are allowed to terminate employees at any time without notice. However, it is illegal to fire an employee for any of the following reasons:
- Race, religion, origin, age, height, weight, marital status, or sex (Act 453);
- Disability (Act 220);
- Reporting a violation or suspected violation (§ 15.362); or
- Exercising their rights (Act 154).