Independent contractors work with employers to complete a project according to the terms of a contract. A company that hires an independent contractor is therefore a client, not an employer. Independent contractors do not have taxes (including federal, state, local, Social Security, or unemployment taxes) deducted from their payments. Employers cannot direct the work of an independent contractor, but they can lay out the terms of approval or performance in the original agreement. The independent contractor has the right to decide when and how to complete the project.