There are many differencesbetween an employee and a contractor. According to Employment Law for Business, an employee is defined as an individual whois employed by a certain employer (Berkley et al., 2024). For one, an employee goes through a hiring process that can include background and drug screen checks according to company policy. Whereas a contractor may go through something similar,but not in as muchdetail. A contractor also can do the work they have been hired to do on their own schedule, as long as the work is getting done timelymanner, whereas an employee usually has set hours they operate within.

The ethical problem here is that if one or another of these individuals weremisclassified, it can cause legal issues withpayment,like paychecks,and even what sort of taxes are taken out. Since some contractorsare 1099 workers, that would mean putting someone in the wrongbucket could keep them from paying the correct payroll taxes and land both the employee and employers in some hot water with the IRS. So it is imperative that when hiring HR puts the individual in the right category.

Reference:

Berkley, R.,Daniel, A.,Zucker, K.,Kaplan, D.,Bennett-Alexandar, D.,&Hartman, L.(2024).Employment law for business.McGraw Hill