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Business Owners Beware — Is Your Contractor Really an Employee? Here's Why a Misclassification Can Be Costly. Here's why it's important for business leaders to fully understand the difference between a contractor and an employee.

By Doreen (Clark) Pierce

Opinions expressed by Entrepreneur contributors are their own.

The past few years have seen a complete shakeup for both organizations and workers alike. Though contractors have consistently been used to fill a temporary need, the recent transition from in-office to a remote workforce has made organizations rethink their hiring processes and, in turn, has spearheaded the era of the freelancer. Today, contractors are commonplace, they are filling roles across all levels of an organization, from startup to global. Not only are they thriving, but they are consciously making the choice to be independent — but the real question is are they being treated that way?

It is clear that organizations can benefit from taking on freelancers, however, it is the organization's responsibility to have a clear understanding of the difference between an employee and a contractor, as the risk, if a misclassification should occur, can be steep. Simply calling a contractor a contractor is not enough. In this case, actions speak louder than words:

Related: What You Need to Know Before Hiring Independent Contractors

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