Students in training as well as graduates ask us at Med-Certification about the differences between working as an employee and working as a contractor, typically referred to as an independent contractor or IC. As technology has expanded, more work at home potentials are available at various jobs, such as medical and legal transcription, coding and billing, and a variety of customer service jobs. The IC arrangement requires establishing agreement, written contracts relating to the work and pay involved. What are the ramifications? No matter what the work involves, ICs must understand how to protect themselves and the company they work for does too.

What does being an independent contractor entail and what should you be cognizant of along the way?
First, an independent contractor is self-employed and utilizes a contract agreement to provide goods or services to a client/customer. Frequently asked questions and guidelines are noted to help you understand contracting.

Who do independent contractors and consultants typically work for?
ICs work for virtually any industry or service, e.g., information technology, patient care, legal work, web development, consumer products, and manufacturing, travel, to name a few. Businesses both large and small often utilize the services of an IC for a variety of jobs. Remote employment has become more typical and ICs are set up to do the work accordingly.

How do independent contractors receive payment?
Typically, most companies will disclose exactly what they expect and the terms and conditions in a written agreement. The agreement should specify how the IC is to be paid and what the timeframe for the deliverables and the payment will be. All of the terms should be clearly defined, incorporated and signed before work commences. If the organization does not provide a contract, templates are readily available online or through business specialties. Examples are provided in our course material (HomeBizBook) available with any of the courses we offer.

What, if any, risks and responsibilities are involved with working as an independent contractor?
There are some risks and responsibilities associated with self-employment, including being personally responsible for tax obligations, health insurance, managing billing and collections; and maintaining current and necessary licensing and insurance. Also consider the legal responsibilities and the exposure associated with job performance and how and when payment is due and what the penalties may be for failure to perform by either party.

Are independent contractors protected by any employment laws?
While this varies by state, independent contractors and self-employed consultants typically are not protected by employment laws, making written agreements even more vital. Regulatory statutes such as workers’ compensation, would not necessarily apply to independent contractors. The same is true on policy/law relating to discrimination or harassment (equal opportunity law).

If a client is not satisfied with the quality of performance, product or service, what are the ramifications?
The contractor is usually responsible for satisfying specific performance expectations, which should be set in the agreement. The agreement should outline in as much detail as possible how dissatisfaction or a problem will be rectified.

What if a client asks me to sign an agreement immediately?
Any reputable organization should allow time to consider the agreement before asking for a signature. If they don’t allow adequate time to think it over or consult with others that may be a red flag. Before signing a contract, a good rule of thumb is to allow 24 hours to review the opportunity and determine if it’s in line with working goals, (as well as time to discuss with a trusted professional).

Summary: Contractual agreements are essential to maintaining mutually beneficial business relationships, especially for independent contractors and consultants. In today’s business climate, they are not only useful tools, but can also protect a business as well as personal assets.
There are several types of contracts to be aware of, many of which are bundled together within contract template software packages. Potential types are: Consulting Service Agreements, Employment Contracts, Network Installation and Maintenance, Staffing and Placement, Independent Contractor/Subcontractor, etc.

For more information about medical coding, legal transcription training courses, and other training resources, visit or call 888-771-1902.