Hourly Employees vs. Salaried Employees
Job postings and descriptions will reference if they are “hourly” or “salary”. An hourly position pays per the hour worked and workers track their hours. These positions receive additional compensation for time over 40 hours and often receive even more for holidays. Salaried positions, on the other hand, are paid a yearly rate, broken down over stated pay periods. The paycheck is the same, regardless of how many hours are worked.
There is a third option – Contractor. A Contractor is someone who works for themselves as their own business and provides services to the customer who in this case is the company. Contractors are responsible for their own taxes i.e. payroll, social security, income, etc. and need to establish themselves as a business.
An upside to this arrangement is you can have multiple clients and have more control over your own work. The downside is you have to manage your own business and find clients.
Some employers do not fully understand the legal definition of contractors. The IRS says, “You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done). This applies even if you are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed.” This means if the company hires someone in this capacity and doesn’t follow the rules, they can be fined. Be sure if you are entering into an agreement as a contractor you fully understand what that means to you and that you understand your rights.
You can find more information on the rules and regulations of being a contractor here: https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-defined