What is an independent contractor?

An independent contract is a worker who creates products or performs service for a fee, but is not considered an employee, and therefore the company does not pay Social Security or federal and states taxes on behalf of the employee (the employee has to make these payments his or her self). Additionally, employers do not pay unemployment insurance, workers compensation insurance, or retirement benefits on behalf of the employee. If the independent contractor earns more than $600 a year from a company, the independent contractor must fill out a 1099-MISC, which reports to the federal and state government wages paid. Additionally, an independent contractor is not an employee, and therefore he or she cannot sue an employer for a wrongful act or injury suffered on the job.