Agency law plays a big part in corporate responsibility (and liability). Differentiate between an employee and an independent contractor. What is the difference and what are the key factors that must be considered in determining one’s status as an employee or independent contractor? Once status is determined, what affect will it have on the responsibilities of the agent? The principal. Is one status better than another? Why? Explain your answers using a representative example involving a principal, an agent, and a situation that would call the agent’s status into question.