In employment law it is important to determine the employer-employee relationship between the person and the company. Persons who perform work while retaining control over the physical details on how the work is to be performed contractors (e.g., details such as when the work is to be performed, who will perform the work, what equipment will be used) may be considered independent.
Whether a worker is an employee or an independent contractor will have implications for the employer in terms of tax withholding, benefits, coverage under anti-discrimination employment statutes, costs and record keeping obligations, vicarious liability, and other liability issues such as gender discrimination. Misclassification of workers who are legally employees as independent contractors could create major liabilities for the employer.
Determining the employee-employer relationship is not always easy and it will depend on the law that is being used. Once it is determined that a worker is an employee, it is important to understand that the legal relationship between an employer and the employee is a contractual one. If there is not a collective-bargaining agreement or individual employment contract for an employee who is not employed by the government, the employee is generally considered to be in an “at-will” employee. At-will employment presumes that either the employer or the employee can terminate the employment relationship at any time and for any reason except for a reason that is prohibited by law. It is illegal to discharge employees who are members of protected classes, based on federal and state anti-discrimination statutes. It may be illegal to discharge non-protected-class employees as well under certain limited circumstances.