A Nebraska independent contractor agreement clarifies the relationship between an employer and a worker, providing legal protection for both. Employers in Nebraska must adhere to different requirements for employees and independent contractors. To avoid misclassification, you should understand the regulations for independent contractors.
- Worker Classification: ABC Test
- Tax Structure: Graduated-Rate Income Tax
- Definition: § 48-604
- At-Will Employment: Yes
Independent Contractor Definition
Nebraska law states that an employee provides services for pay under the control or direction of an employer. Employees gain certain benefits unavailable to contractors, including workers’ compensation coverage, unemployment benefits, minimum wage, and overtime protections.
A worker must meet several criteria to identify as an independent contractor in Nebraska. The primary factor is the amount of control the employer exerts over the services performed. Since an independent contractor does not work directly for the business, they do not receive the same protections and benefits as an employee.
Worker Classification Test
Workers misclassified as independent contractors may not receive the benefits owed under federal and state laws. Employers who misclassify workers may suffer severe penalties, including back taxes, fees, fines, and even jail time.
Nebraska uses a test to define independent contractors and avoid misclassification. When a dispute arises, the court uses the following factors to determine whether a worker is an independent contractor:
- How much control the employer has over the services provided.
- Whether the worker consistently operates in a specific field or profession consistent with the services in the independent contractor agreement.
- Whether the work is conducted independently or under employer supervision.
- Whether the work is consistent with regular business conducted by the employer.
- Whether the worker provides the necessary equipment and tools to perform the contracted services.
- The length of the employment period.
- The payment method.
According to the Nebraska Department of Labor [1] , there are no statutory criteria, so the courts rely on previous rulings to resolve misclassification disputes.
Rights and Responsibilities
Independent contractors in Nebraska have the right to perform services for clients consistent with their Nebraska independent contractor agreement without the client’s control or supervision. They are not entitled to workers’ compensation benefits if injured while working as an independent contractor.
State Taxes
Per Nebraska statutes [2] , independent contractors must pay state and federal income tax. They will also pay self-employment tax to cover Social Security and Medicare deductions that are typically paid or deducted by the employer.
Filing for Unemployment
Unemployment payments come from the Nebraska State Unemployment Insurance Trust Fund, which is funded by a specific tax on employers.
Independent contractors in Nebraska do not pay unemployment insurance tax and, therefore, are not eligible for unemployment benefits if they lose work.
Sample
Below, you can download a free Nebraska independent contractor agreement template to start creating your contract.
