Labor relations: foundations and overview

Labor Relations

What do you believe are the benefits to being an employee of a company vs. A contractor? Which would you prefer to be? Why?

The benefits of being an employee include the right to self-organization, to bargain collectively, or form a labor organization (Carrell & Heavrin, 2007). Employees have pre-determined work days and duties under the leadership and direction of the employer and are not required to incur costs or make investments in the work they produce. Typically, only general education and experience is required, with some employers paying for additional training and specializations. All income, Social Security and Medicare taxes that fall under the Federal Insurance Contributions Act (FICA) are handled by the employer (Strawson, 2003) For most employees, there are also employer contributions made to pensions and other retirement plans, health and disability insurance for self and family members, and unemployment compensation after a lay off or termination. Worker's compensation is available in the event of a workplace injury and employees have the protection of workplace safety and anti-discrimination laws. There are also federal and state wage and hour laws.

An independent contractor sells professional services to the highest bidder. He or she has the flexibility to set his or her own hours and schedule and work independently for as many clients or companies as desired. The independent contractor can determine how to approach projects and has typically acquired very specialized skills, education or experience in an area (Strawson, 2003). All costs associated with performing the job are paid out of pocket, although independent contractors are generally entitled to deduct all reasonable business expenses from their reportable annual income. Working as an independent contractor requires paying self-employment taxes and being diligent with retirement planning and saving for emergencies or times of slow business. Unlike an employee, there are no set provisions for health insurances, workers or unemployment compensation, or overtime. The independent contractor is not protected by workplace safety and employment anti-discrimination laws and is not entitled to join or form a union.