Differences between agent, employee and independent contractor
LAW FOR COMMERCE 2
Explain how the court will determine whether a person is an employee, an independent contractor, or an
agent.
Differences between agent, employee and independent contractor
The differences between an employee, agent and independent contractor are established
by various factors such as the degree of skill used in performing the job, the mode of payment,
the regularity of the work in the company’s business, whether the work forms part of the
ordinary business of the principal, and the tools and materials used in doing the job
(Megerdomian, 2010).
While the agent and employee work under the control and direction of the principal, an
independent contractor acts as a separate and distinct entity. Thus, an independent contractor
provides service in accordance with his own control and direction. Employers do not determine
the manner, means and details of the job done by independent contractors. However, an
employee does not act as a separate and distinct entity but works in the employer’s business,
under the direction and control of his employer.
An employer is also distinguished from an employee in line with the mode of payment.
An employee is on the employer’s payroll and receives regular payment. However, an
independent contractor receives payment by the job done. Another difference is that an
independent contractor uses his own tools and materials in carrying out his work while an
employee uses tools and materials provided by the employer.
An agent is a person acts in accordance with the authorization of the principal. The
authority may either be actual, apparent or ratified. An agent may operate either as an
independent contractor or an employee who provides service for the principal on a regular basis.
LAW FOR COMMERCE 3
Nevertheless, a fully independent third party is capable of being an agent without having any
status of an independent contractor or employee.
Reference
Megerdomian, L. (2010). Distinguishing Independent Contractors and Employees.
