What distinguishes an independent contractor from an employee?

The defining characteristic that sets independent contractors apart from employees is that independent contractors are self-employed. This means they operate their own businesses and are typically responsible for managing their own taxes, insurance, and benefits. They have the flexibility to choose how, when, and where they work, which contrasts with employees who work for an organization and often follow the employer’s directives regarding work hours and tasks.

Being self-employed also allows independent contractors to take on multiple clients simultaneously, enabling them to have a diverse portfolio of work. Unlike employees, independent contractors do not generally have access to the same benefits and job security provided by an employer, such as health insurance and retirement plans.

The other options misstate or misrepresent aspects of employment and contracting arrangements. For example, stating that independent contractors cannot work from home is inaccurate, as many operate out of home offices. The notion that employees have no specific service criteria or that independent contractors earn a fixed salary does not hold true, as contractors can often vary their rates and salaries depending on different projects or clients.