Key Differences Between Employees and Independent Contractors Item Make Employer Contribution to Social Security Make Employer Contribution to Medicare Taxes Withhold applicable taxes Employee Yes Yes Yes Independent Contractor No No No Yes No No No Generally no Generally no Generally no
File Form 1099-MISC with IRS if you pay the No person $600 or more Carry Workers Compensation Insurance Yes covering the person Contribute to unemployment insurance fund Yes and/or tax Eligible for job benefits such as paid vacation, Yes sick leave, holiday, stock options Eligible for overtime pay Right to control how the worker performs the specific task for which hired Right to direct or control how the business aspects of the worker’s activities are conducted Yes Generally yes Generally yes