Independent Contractor or Employee

To ensure compliance with both tax and labor laws, businesses must properly classify workers as employees or
independent contractors. Under tax laws, businesses must withhold income taxes, withhold and pay Social Security and
Medicare taxes, and pay unemployment taxes on wages paid to employees. Under labor laws, businesses are generally
required to pay employees both a minimum wage and overtime pay for hours worked over 40 in a workweek. Businesses
are generally not required to comply with any of these requirements for their independent contractors