In business after business and industry after industry, buyers and sellers of labor services are increasingly facing a difficult problem: should workers be treated as employees or as independent contractors?
This is no small matter. Even though there may be no essential difference in the work performed, thousands of pages of laws and regulations, large sections of the tax code, virtually all of employee benefits law and eligibility for numerous social insurance programs are dependent on whether or not a worker is legally determined to be an employee.
Under ObamaCare, for example, the difference in subsidies available from the federal government can total $10,000 or moredepending on how a worker is classified. For lower income workers, not being an employee is better. The subsidies are much greater in the health insurance exchange and a contract worker can have ready access to them. But if the individual is an employee, his employer is generally obliged to offer affordable insurance or pay a fine. If employees turn these offers down (because they really arent affordable), they are not eligible for subsidized insurance in the exchange and they are potentially subject to fines.