What Is an Independent Contractor?

By Jeremy Bowman – Updated Feb 26, 2025 at 2:08 PM EST

Key Points

Independent contractors have full control over their work methods, unlike employees.
They must pay both employer and employee portions of payroll taxes.
Their flexibility allows working for multiple employers, often at higher rates.

If you've ever been an employer, or if you have varied work experience, you're probably aware that there are different categories of employment.

An employee is the most common type of employment status, but there are also millions of Americans working as independent contractors.

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We see a young man in a car's driver's seat, turning around to look at someone in the back seat. — Image source: Getty Images.

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One of the reasons the distinction between an independent contractor and an employee is sometimes controversial is that independent contractors have to pay both sides of payroll taxes for Social Security and Medicare.

If you're an employee, the employer pays half of those expenses, so it benefits the employer to use independent contractors instead of employees. However, employers often prefer to use independent contractors so they can avoid paying taxes.

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About the Author

Jeremy Bowman has been a contributing Motley Fool stock market analyst, covering technology, consumer goods, and macroeconomic trends since 2011. Before The Motley Fool, Jeremy was a newspaper reporter, restaurant manager, and English teacher abroad. He holds a bachelor’s degree in English from Colorado College and a master’s degree in business administration from American University. One of his Motley Fool headlines was briefly featured on Late Night with Stephen Colbert.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends DoorDash and Uber Technologies. The Motley Fool has a disclosure policy.