Businesses often prefer independent contractors (also known as consultants or freelancers) for the flexibility in structuring payment, and to avoid: paying minimum wage for all hours worked, overtime, family medical leave and paid sick leave, disability and unemployment insurance contributions, and workers compensation insurance premiums.
Because of tax benefits, many workers also prefer contractor status.
The incentives to avoid employee status leads to “substantial losses to the federal government and state governments in the form of lower tax revenues, as well as to state unemployment insurance and workers’ compensation funds.”
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