The employer-employee relationship is one of the most legislated, regulated, taxed and litigated relationships we have. The finances of our state and federal governments are tied largely to payroll taxes that include income tax, social security, Medicare, disability, unemployment and local taxes. Our financial markets are also largely dependent on retirement and insurance investments tied to the employment relationship. However, independent contractors are exempt from most of payroll taxation and regulation. Businesses that hire independent contractors don’t have to withhold taxes, pay benefits or contribute to the 401K accounts. Other laws, including wage and hour, workers’ compensation and EEOC requirement often do not apply to the hirer/independent contractor relationship. So there is a huge financial distinction between the employer-employee relationship and the hirer-contractor relationship