You are responsible for the full 12 1/2% social security tax.
You also have to pay estimated quarterly income tax estimates.
You have to get your own health care.
You are not eligible for unemployment insurance without jumping through a bunch of hoops (if then).
You need to buy your own errors and omissions insurance.
Not sure what workman’s comp does, probably not covered unless you buy a policy.
You are responsible for all the money on your pay checks as to taxes. Any expenses, you have to document.
Yes, you just got laid off. The good news is you can make some money as a contractor. BTW, the IRS takes a dim view of what your employer is trying to do.
And if your “employer” tells you what to do, how to do it and when to do it, the IRS says he is not hiring a contractor, but an employee.
Had an employee in the past who decided she wanted to start her own business and be an independent contractor because of some family care issues. Both she and I had to do battle with IRS and TWC in Texas over the switch. She did evidence meeting some pretty specific standards such as getting her own dba, having a business checking account, advertising her services, negotiating fees, using her own equipment, working without supervision but with a written contract which outlined the scope of the services, having her own work site, etc. Finally resolved and she was able to start her own business.
She did have to pay full SS tax as well as Medicare, so the freight on that was 15.3% of her net business income, not 12.5%. Not sure how employers get away with just deciding to switch an employees to contract.
Texas also has rules which govern when comp time can be given in lieu of paying for overtime.
Bottom line is that I would check out regulations from employee’s home state Employment Commission and see what is legal and what is not.