What's the difference between an independent contractor (IC) and an employee (EE)?
By definition, an employee is hired by a company or corporation to provide services on a structured salary, protected by Federal and State labor laws and requirements. An employee is responsible for following the guidelines, rules, and standards set forth by their employer and may be terminated for violation of these standards. Employees of a company or organization are typically categorized into four different job classifications including:
- Limited part-time (hourly)
- Part-time (hourly)
- Full-time (hourly)
- Full-time (salary)
An employee (EE) is often protected by state labor laws and guaranteed certain rights and privileges based on the state in which they are employed. They typically work hours assigned to them by their employer and are required to comply with employer standards for efficiency and services rendered that are unique for each employer. Employees are responsible for reporting to a superior or groups of management within the organization and are provided rules and standards that must be followed in order to stay employed.
An independent contractor (IC), however, is essentially his or her own boss. By definition, an IC is a natural person, business, or corporation that provides goods or services to another entity under terms specified in a contract or within a verbal agreement. Translated into simple English: an independent contractor provides services to customers and is not a legal employee of any corporation.
Independent contractors typically set their work schedules, can register and file taxes as a business (which comes with multiple tax deduction benefits unlike an employee). When they provide services on behalf of a company or organization, they are required to follow certain guidelines, codes of ethics, or other standards in order to remain hired by the company or organization. They often are responsible for reporting their hours, status of jobs and other data to individuals of the organization they are working with, but are given latitude to accomplish their assigned tasks at their own pace.
Independent contractors are sometimes restricted on how many hours they can bill a client, but they have the flexibility to adjust those standards to serve the company’s customers, unlike employees who often are restricted on their earnings.
Should mechanics be independent contractors or employees?
Regardless of their experience, a mechanic takes tremendous pride in their work. Whether it's a simple oil change or diagnosing a major electrical problem, taking care of customers' automotive issues in an efficient and professional manner often separates the average mechanic from the expert that everybody recommends. It makes sense then to assume that if you're one of these professional ASE certified mechanics, you should reap all of the benefits, which is why more and more ASE certified mechanics are choosing to accelerate their careers by becoming an independent mechanic.
According to statistics provided by the United States Census Bureau, there are currently in excess of 240 million consumer cars, trucks, and SUVs that travel the highways and city streets in our great nation. Due to the fact that all of these vehicles require oil changes, tune-ups, power steering fluid service and more, that's a lot of potential business for a professional mechanic. It's for these reasons, and the sheer joy of working on mechanical systems, that most mechanics choose to earn a living providing these valuable services.
There are some mechanics who choose to work for dealerships, large volume auto shops, or repair facilities for the convenience, or what they assume is the stability of earning a paycheck. But what happens when business is slow? Hours are cut, salaries are slashed and hard-working mechanics, for no fault of their own, find themselves laid off and searching for another job. With the growth of independent mechanic companies, like YourMechanic, more and more consumers are beginning to see the value (both financially and in terms of convenience) in working with independent mechanics who provide exceptional service, at a more affordable price. This trend has created a more secure platform for experienced mechanics to provide onsite services, working with flexible hours and earning a very competitive wage.
For those who have wondered what it really means to be an independent mechanic, and why you should consider making the switch from being "one of the guys in the shop" to being your own boss, the information below should give you a big picture point of view, so you can make an informed decision.
Which option is better for personal financial responsibility as a mechanic?
Being a mechanic is not as easy as many people might assume. If you've been hired as a mechanical employee for a shop (whether it's small repair facility or a major automotive dealership) you understand that the employment comes with certain responsibilities. Most mechanics who are hired as employees are responsible for the following:
Supplying and maintaining their own tools
Responsible for maintaining and fulfilling shop supply inventory
Responsible for completing work or projects on structured time increments
Accountable for following the procedures and rules set forth by the shop (even if it's not the most efficient or best way to accomplish a repair)
Responsible for following work schedules (even if there are personal conflicts)
Although these individuals pay for their own tools, pay to have them replaced, and have to finish jobs under someone else's time requirements, they are often not compensated justly. For example, if a customer comes into "John's Service Shop" and wants to have their struts replaced, the shop will charge the customer a fee for the work. The shop will charge the customer for shop supplies, an upcharge for the cost of parts, and typically bill the customer for any overtime put in by the mechanic to complete the task on the customer's schedule.
So the question that many mechanics are asking themselves right now is simply put: how much of that do I see?
Let's break that down. If it takes the mechanic 3 hours to complete this project, the mechanic is paid on an hourly basis for the services they provided. According to the United States Bureau of Labor Statistics, the average salary for an ASE certified master mechanic working for a shop ranges between $14.89 to $30.09 per hour. Assuming that the average mechanic is paid $25.00 per hour, they will be paid $75.00 (before taxes) to complete this job.
But what was the cost to the mechanic?
Typically, the mechanic has to pay for his own tools when they work for a shop. What if the mechanic broke a specialty wrench for replacing the struts? She'll have to buy a new one out of pocket in order to continue working for that shop. In some cases, they have to pay the shop for the materials used, like shop rags or uniforms. Plus, they are charged state and federal taxes at a higher rate than the shop is charged. In the end, the mechanic would be lucky to walk away from that three hour repair with $40.00 in his pocket.
Now let's assume that you're an independent contractor providing the same service - three hours to replace a pair of struts. You show up to the customer's home or office with the same supplies and tools that you pay for to maintain, but instead of earning $25.00 per hour, that rate goes up to $40.00 per hour. Being an independent contractor gives you the ability to register as your own business, meaning that the $120.00 you earned for completing this job is taxed at a lower rate. Plus, as a business, you will most likely be able to deduct the mileage and cost of fuel that it took you to travel to that customer's location.
In the end, you most likely will take home $90.00 as opposed to $40.00 working as an employee. So which one, being an employee of a company or an independent contractor, sounds like it would be more financially responsible to you?
Which option provides flexibility in scheduling work?
There is an old expression that definitely applies to this question – "he (or she) who has the gold makes the rules." It's a simple statement of fact that if you work for somebody else, your flexibility in regards to work schedule is limited to their demands. Typically, a company hires a certain number of employees to ensure the needs of the business are covered first and foremost. As much as the "boss" would like to accommodate every employee’s personal requests, they simply can't.
When you're an employee of a small shop or large dealership, work schedules are typically offered to employees based on three factors:
They are required to provide full-time hours to employees classified as full time – first.
Schedule shifts are given to full-time employees based on seniority or company policy – second.
Additional work requirements are allocated to part-time employees – third.
When you work as an employee for a company, you earn paid time off for vacations and can request personal time off based on the needs of the company. For example, if your daughter is having her teeth pulled on a Wednesday, you may or may not be given the day off to care for the child based on the needs of the company. As an employee, you're given a work schedule that you must work, regardless of personal obligations or issues that may cost you more money in the long run, like paying for child care.
As an independent contractor, you are the one with the gold. When it comes to working as an independent mechanic, especially when you work for a growing enterprise like YourMechanic, for example, you let those you communicate with know when you are available to complete service. If you need to have a Wednesday off to take care of your child, you have the choice and freedom to request that time be assigned to another mechanic in the area. If you have a time conflict when your spouse is working and the kids need to be picked up from school, you can request and receive that time off as well.
Beyond the time-off benefits, independent mechanics have additional flexibility when it comes to the type of services they provide. For example, if a certified ASE master mechanic is a specialist who likes to work on transmissions, he can opt in to complete jobs that are specific to that particular segment. If he is diverse and enjoys different types of mechanical repairs and maintenance, the growth and business potential is diverse and much better than working within requirements of the establishment "job."
Since there is always work to be completed on vehicles, especially in a metro area, working as an independent mechanic gives individuals the flexibility to work as much as they'd like. There is no limit to earning potential, but more than that, you can dictate personal time off to spend with family, or enjoy personal time.
In the end, when it comes to flexibility for work schedules, there is no comparison: the independent mechanic wins this round as well.
Which option is best for business growth for a mechanic?
Even the biggest corporate dealerships have problems growing business. Case in point: from 2010 to 2014, the growth rate of automotive service technicians working at car dealerships was pretty good – about 15% to be precise. However, since 2014, there has been a steady decline in the amount of jobs offered at dealerships and mom-and-pop automotive shops. The biggest reason – the significant growth of independent mobile mechanics.
One problem that every business has is trying to find affordable ways of marketing themselves to stimulate new customers and growth. They try multiple advertising platforms from making television commercials to sponsoring sporting events. However, the best bang for the marketing buck today is online marketing. The biggest issue with having dealerships and small, local mechanical shops try this method is that they simply don't know how to do it correctly. As an employee of one of those companies, you're restricted to on-the-job growth based on the talents of others – especially when it comes to marketing to new customers.
However, when you're an independent contractor working for a company filled with online marketing experts, like YourMechanic, the sky’s the limit. YourMechanic is capturing new site visitors every day. The instant Ask a Mechanic service they offer to site visitors, along with the professional advice offered by experienced mechanics, creates new business on a daily basis. Once these customers need automotive maintenance, service or repairs and see the value of working directly with the professional independent mechanics that represent YourMechanic, they hire you, the mechanic, to complete these jobs.
Since overhead is reduced, the savings are passed along to the customer, while the independent mechanic is paid a highly competitive wage and has the opportunity to impress a customer with their experience and exceptional service.
Which option is the best for customer service superstars?
We've now arrived at arguably the most important difference between being an employee of a company and an independent contractor – which option is best to allow a hard-working and customer-centric individual to grow? Simply put, when you're an independent contractor, you are the only one who can impact your job growth when it comes to how you handle and treat customers.
One of the biggest issues that hard-working and polite people have is when someone else at their job poorly treats a customer, causing them to not only refuse to work with that shop again but, most importantly, go out of their way to tell 10 of their friends how bad their service was. Ask any experienced mechanic who is treats customers poorly, and 90% of them will say it falls on two types of people:
The shop manager or owner who tried to price gouge the customer
The service writer or salesperson who led them to believe inaccurate information (especially on service, warranties or cost of service)
Even though the mechanic went out of her way to provide exceptional service, was polite and did a fantastic job, the interactions of others typically leave a bad impression with the customer.
As an independent mechanic, you are responsible for taking care of your customers. The customers work with YourMechanic directly, but since the pricing and service is transparent and upfront, there are no surprises when the customer gets the invoice. As an independent contractor, when you do a great job for a customer, you have the power to ask them to refer their friends directly to hire you though YourMechanic. You also can build a base of repeat business and, as any good mechanic knows, it's better to have 10 consistent customers who need you every month as opposed to 20 new people.
If you're a hard-working, independent-minded, customer-centric and experienced ASE certified mechanic who is tired of working for less than you deserve and truly want to be your own boss, consider working with YourMechanic. Joining our team as a mobile mechanic is a chance not only for you to begin working with a company that will completely change the automotive repair industry, but also an opportunity for you to influence that change. You’ll enjoy great pay, a flexible schedule, loyal customers, and drama-free work.
If the benefits of being an independent mechanic outweighs the struggle of being "just another employee" sounds good to you, apply to join us as a mobile technician today.