<p>A true independent contractor as defined by the IRS is described here:
<a href=“Independent Contractor Defined | Internal Revenue Service”>http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Defined</a>
<a href=“Independent Contractor (Self-Employed) or Employee? | Internal Revenue Service”>http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee</a>
<a href=“http://www.irs.gov/uac/Employee-vs.-Independent-Contractor-–-Seven-Tips-for-Business-Owners”>http://www.irs.gov/uac/Employee-vs.-Independent-Contractor-–-Seven-Tips-for-Business-Owners</a>
<a href=“Topic No. 762, Independent Contractor vs. Employee | Internal Revenue Service”>http://www.irs.gov/taxtopics/tc762.html</a></p>
<p>But some companies try to have people work as “independent contractors” to avoid payroll taxes and benefit costs; not all of them get caught by the IRS. A true independent contractor would be paid a higher pay rate than an employee, because that higher pay rate goes toward the independent contractor buying his/her own benefits and paying the additional payroll taxes (schedule C and SE on the IRS form 1040). A true independent contractor may be working for several customers simultaneously.</p>