Craigslist Independent Contractor Jobs and Employee Status

Recently, I saw an ad on Craigslist that described a job, and stated that they would not accept telecommuters, all work was on-site, and "independent contractor." This ad might have been illegal, because there are laws about what defines an independent contractor and what defines an employee. Small businesses that misclassify workers can get an unfriendly visit from the tax man.

The rules are at the IRS website:

Generally, an independent contractor is free to work where he or she wishes, within reason. Likewise, the hours worked are set by the contractor, within reason. By within reason, I just mean you generally need to conform somewhat with the client's business hours. Also, generally, the client doesn't provide a workspace. That's typically negotiated with the client, if it's necessary to work in their office. That's why the ad on Craigslist raised a red flag.

Furthermore, a typical independent contractor provides their own equipment and tools. A programmer shows up with a laptop, and probably has computers at their office and/or home. They buy thier own software licenses as well.

All this matters to the IRS because it completely changes the way you pay taxes, and also how you pay for Medicare and Social Security. The Department of Labor cares about your status because a misclassification tends to erode the rights of regular employees -- generally, employees have expanded rights due to their status as employees, particularly regarding how many hours you work per week. Likewise, employers have a range of rights and responsibilities, including local responsibilities. Failing to classify a worker correctly can lead to tax audits and back taxes could be owed.

If you're doing computer jobs on Craigslist, it's more likely than not that you'll have to know these differences.