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Employee vs. Independent Contractor: Why Does It Matter If you’re hiring or working with others, understanding the difference between an employee and an independent contractor is crucial. Generally, an employee is under your control and direction. You'll pay wages, taxes, and benefits. An Independent Contractor works on a project basis or contract basis and is not directly under your control. Misclassifying workers can lead to serious legal and tax issues, including penalties and fines from the

Independent contractor vs employee