Your Legal Rights as an Independent Contractor

Navigating your legal rights as an independent contractor can be complex but essential, especially if you’re a freelancer or self-employed professional in Missouri. Understanding your rights can help you protect yourself, fulfill your obligations, and ensure fair treatment in your work relationships. If you have concerns about safeguarding your rights—including those tied to workplace safety or injury—you may benefit from consulting a Kansas City personal injury lawyer for expert guidance on local laws. 

This blog outlines critical aspects of your rights, from understanding key differences between an employee and an independent contractor to common legal challenges and how to protect yourself. Let’s make sure you’re equipped to move forward confidently. 

What Are Your Legal Rights as an Independent Contractor? 

Independent contractors are entitled to specific rights, typically outlined in agreed-upon contracts or terms. These rights differ from employees and are defined by the nature of your working relationship, as determined by various legal factors. For example, the IRS reviews behavioral control, financial control, and the type of relationship between you and the hiring party to confirm your classification. 

Key Rights Include

Control Over Work

You have control over how, when, and where to perform your job as long as you meet contract terms. This autonomy allows for greater work-life balance, flexibility, and the ability to optimize productivity according to your personal schedule.

Payment Protections

Contractors have the right to receive payment as agreed upon. If disputes arise over unpaid work or delayed payments, contractors can pursue legal actions to ensure fair compensation and protect their earnings, securing financial stability.

Freedom to Contract

You can enter into agreements with multiple companies, negotiate terms that align with your goals, and pursue diverse opportunities that best serve your professional, financial, and personal growth interests in your career journey.

Ability to Deduct Expenses

Self-employed professionals can claim tax deductions for necessary expenses tied directly to their job, such as equipment, travel costs, software subscriptions, marketing fees, and office supplies, reducing taxable income.

It’s crucial to understand that federal and state laws determine classification as an independent contractor versus an employee, not the title given to your role, highlighting the importance of legal clarity. 

Key Differences Between Employees and Independent Contractors 

Independent contractors and employees work for businesses, but the rights, responsibilities, and restrictions differ significantly. Proper classification is essential to avoid costly missteps for both workers and companies. 

Employees are typically on a business’s payroll, following the organization’s guidelines, and receiving benefits like health insurance, paid leave, and workers’ compensation. On the other hand, independent contractors work for themselves, enjoying greater flexibility but being responsible for self-employment taxes, insurance, and managing their benefits. 

Employees vs. Independent Contractors Comparison:

• Taxes: Employees’ employers automatically withhold income tax, Social Security, and Medicare taxes. Conversely, contractors are responsible for calculating, managing, and paying their taxes, including self-employment tax, which covers Social Security and Medicare. This requires additional financial planning and tax filing. 
• Control: Employers dictate how employees complete tasks, including scheduling, processes, and tools. In contrast, independent contractors can determine how they achieve their agreed-upon results, allowing for greater flexibility and autonomy in their work. 
• Benefits: Employees often enjoy benefits such as healthcare, retirement plans, paid time off, and other perks their employer offers. Contractors are generally not eligible for these benefits and must independently secure their health insurance and retirement savings plans. 
• Job Security: While employees often have more stable, ongoing roles, contractors typically work on project-based contracts that can end once the project is complete. Contractors are also not eligible for unemployment benefits or severance pay if their contracts end unexpectedly, creating less financial stability than traditional employment.

Common Legal Challenges Faced by Independent Contractors 

Working as a freelancer or independent contractor offers flexibility but may come with legal hurdles. Here are the most common challenges faced by Missouri professionals and freelancers everywhere.  

Misclassification 

Some companies intentionally or mistakenly misclassify workers as independent contractors to avoid paying benefits, workers’ compensation, or proper wages. Under federal law, misclassification can lead to back pay, damages, penalties for the employer, and potential legal consequences for noncompliance.

Workplace Injuries 

In most cases, Independent contractors aren’t covered by workers’ compensation, leaving them vulnerable to medical expenses, lost income, or financial hardship following a workplace injury unless the hiring party is proven negligent. 

Payment Disputes 

Contractors may encounter issues with timely payment or client refusal to compensate for completed work, which can lead to financial strain and frustration. Clear contracts with detailed payment terms, agreed timelines, and delay penalties can minimize this risk.

Intellectual Property 

Another concern is disputes about intellectual property. Contractors should establish clear ownership of work products, including designs, code, or content, when forming agreements with clients to avoid future conflicts, ensure legal protection, and maintain trust and transparency between all involved parties.

Recognizing these risks allows you to proactively safeguard your financial and professional interests, ensuring long-term stability and career success.

How to Protect Your Rights When Working as an Independent Contractor 

Protecting your legal rights as an independent contractor requires diligent planning and strategic action. Here are four critical steps to safeguard yourself against potential disputes, risks, or unfair treatment. Carefully review contracts, maintain detailed records, secure proper insurance, and consult a legal professional to protect your interests.

Establish Clear Contracts 

Signing a clear, enforceable contract is crucial before starting any work relationship. A well-drafted contract should outline payment terms, scope of work, deadlines, revisions, dispute resolution processes, and additional expectations such as non-disclosure or intellectual property clauses. These steps ensure clarity, protect both parties, and establish a strong foundation for a successful collaboration.

Maintain Accurate Records 

Keep detailed records of your contracts, communications with clients, invoices, and receipts for business expenses. These records can be invaluable in resolving disputes, supporting tax claims, tracking financial performance, preparing for audits, managing cash flow effectively, improving decision-making processes, and ensuring compliance with legal and regulatory requirements.

Ensure Compliance with Tax Laws 

Independent contractors must take responsibility for their taxes, including self-employment tax and quarterly estimated payments. Partnering with a tax professional or using accounting software can simplify this process and help avoid costly mistakes. Staying organized, tracking expenses, and understanding deductible items are also essential for minimizing tax burdens and ensuring compliance.

Stay Insured 

Consider obtaining liability insurance and disability coverage to protect yourself from unforeseen circumstances, such as third-party claims or loss of income during periods of incapacity. These policies provide financial security, ensuring peace of mind and stability in unexpected situations like accidents, illnesses, or legal disputes.

By being proactive and organized, you can manage risks effectively, build stronger relationships, and focus on independent contracting opportunities more confidently.

Consult with a Kansas City Injury Attorney to Safeguard Your Rights 

Working as an independent contractor provides flexibility, but understanding your legal rights as an independent contractor is essential for protecting yourself from misclassification, unpaid wages, or workplace injuries.

At Devkota Law Firm, we specialize in advocating for professionals like you. Whether you need assistance with contract disputes, workplace injuries, or employment classification issues, our legal team is ready to help.

Visit us at 4010 Washington Street, Suite 350, Kansas City, MO 64111, or call us at (816) 207 4255 to book a free consultation.