There are very clear legal distinctions between the two, and the Internal Revenue Service cares deeply and passionately about the difference. The light-hearted infographic below shows some of the ways that contractors and employees differ and the consequences of those differences. You may also find this test for defining an independent contractor and related next steps helpful.
If you want the full story on making sure you classify workers correctly, you should invest in our “Independent Contractor Versus Employee” resource guide. The guide also includes a handy list of employment laws by company size.