Labor Law or the Employment Law represents a legal relationship between the employees and their employers. Labor Law related statutes appear at all government levels. The regulation governing the employer/employee relationship starts immediately an employer makes an employment offer to an employee.
This law regulates the whole employee/employer relationship-from the hiring process down to the contract termination. It also encloses litigation concerning discrimination and unfair labor proceedings.
What is the main difference between an employee and an independent contractor?
Aside from the question of whether the regulations governing the relationship between an employee and employer apply, understanding this disparity is also essential with regards to the handling of income either earned by an independent contractor or employee.
An employee salary is bound by personal income tax deductions (both state and federal). Employers deduct half of the Medicare and Social Security tax from the wages of an employee while they contribute the remainder half. Employers contribute to several employment systems in the state (like education or disability) aside from also offering employee compensation in the instance an accident befalls an employee while on duty.
This loading’ either for benefits and taxes can represent an additional cost of between 20 and 35 % to employers above the gross wages of an employee.
On the contrary, Independent contractors operate for their benefit. The Independent contractors part with quarterly deposits for state and federal personal income tax (centered on annual estimates), provides individual benefits and insurance not to mention paying the full contribution to Medicare and Social Security taxes. Independent contractors operate free of any hour and wage regulations. What’s more, they also don’t benefit from unemployment insurance programs whatsoever.
There exists no employee-employer relationship between a client and an independent contractor. Independent contractors control all the processes including job operation, while the service/product purchaser retains control of the work result.
When are SLAs or agreements with contractors, service providers and employees?
When it comes to general employees, you need to have policies in place rather than employment agreements. Employee agreements should only be with critical employees to a company together with those having unique benefits. The Labor Law is consecutively precise, and as such you should consult with a professional attorney before making any decision.
Company policies simply set out uniform instructions and treatment for staff on workplace behavior and performance or give notice. These policies should be part of the initial document the employee receives during the hiring process to guarantee that it is binding as is effective on them.
Employment contracts primarily ensure that all parties are bound legally to the whole employer-employee relationship. With these agreements, employers are liable for giving an employee the remainder of their salary in case the employer breaches the contract and dismisses the employee. What’s more, employees cannot quit without the employer suing them for violating the contract. Also included in these agreements is salary, vacation, bonus, among other sections. The sections are typically not only comprehensive but also restrictive to either party.
As for service providers or contractors, an agreement is crucial. Devoid of an officially written agreement structures under standard copyright regulations, you relinquish your ownership of the products of your staff. Moreover, it is also to guarantee that there is an explicit agreement about the services, warranty of the products and the certainty of originality of the job from the contractor.
SLAs (service level agreement) are agreements for services that outline the performance levels which must be met.
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