For example, in Institute for Resource Management Inc. The risk of treating similarly situated workers differently is that the workers you are trying to treat as independent contractors may be reclassified as employees. The same can be said for having some employee messengers and some independent-contractor messengers (or sales people, computer programmers, or what have you). However, it is inappropriate to have to have one worker selling shoes on an independent-contractor basis and another similarly situated worker doing the same thing as an employee. Many businesses have some employees and some independent contractors, and there is nothing improper in so doing. If the worker later claims that he or she considered him or herself to be an employee, to what will your client point as a contrary indication? 2. Plainly, such a contract does not by itself mean the worker is really an independent contractor, but the lack of a written contract will make employee status much more likely.įurthermore, your client may even have a dispute with the worker directly. The taxing, labor and employment, and insurance authorities expect a written contract that states that the worker is an independent contractor and will be paid as such with no tax withholding, no benefits, etc. Without a written contract, your client is virtually doomed to fail in any dispute over the status of the worker, no matter how strong the client's independent-contractor facts may be. Yet it is surprising how many businesses have regular and long-term workers-on their premises or off-paid month after month and year after year as independent contractors without a written contract.Īs a business lawyer, if you become aware of such a situation, take steps to warn your client. If you hire a plumber for a one-time toilet fix and pay out $200, I would not worry that he or she is an employee. Not Having a Written Contractįailing to have any written agreement for independent contractors is a recipe for disaster. Here are the top 10 mistakes I see committed by companies in using workers the company may believe are safely independent contractors but who may actually turn out to be reclassified as employees. That can impact the status of the worker as an employee or independent contractor.
The worker's role may morph into something quite different from what it was at the inception of the relationship. Business lawyers should encourage their clients do so when additional workers are brought on, when the tenure and nature of the relationship changes, when the tasks expected of the worker expand or contract, or when other terms and conditions of the work change. Business lawyers can serve a key function in this regard. Whether or not the arrangement works out well, clients tend not to revisit fundamental questions such as whether the workers should be independent contractors or employees.īusinesses can avoid major landmines if they consider these topics from time to time.
When a business client hires workers in any capacity, they understandably focus on business objectives. Far from being a one-time or immediate problem, the issue has significant legal implications down the road. Yet paradoxically, the question whether to hire someone in one capacity or the other may garner little attention from business people.īecause of the potential for staggering tax and other liabilities such decisions can trigger, business lawyers must be vigilant. In fact, it is hard to think of a more consequential business decision.
The decision whether to hire a worker as an employee or an independent contractor is a significant one with fingers in a large number of pies, with regulations from the IRS, the Department of Labor and employment statutes, and state unemployment insurance authorities. Yet actions the client may take can have enormous implications for overall liability, as well as particular employment law and tax implications both immediately and for many years into the future. It is not always possible to stop the flow of business and to seek legal advice on every point.
This is understandable, because their clients must make many decisions. Often, particularly given the fast pace of business today, business lawyers are in the unenviable position of being forced to give a kind of template for how a situation should be resolved. Clients expect them to not only provide accurate legal advice, but to also provide it in a practical and digestible form. Business lawyers must be flexible and advise their clients on a plethora of legal issues.
0 kommentar(er)
