Independent Contractor Rules – Part 2

Independent Contractor Rules - Part 2 by Alan Krystal

{3:54 minutes to read} In my previous blog, I outlined the reasoning behind the scrutiny of independent contractor vs. employee. In this part, I will cover some additional strategies for addressing this situation.

Looking Beyond the Agreement

You have to look beyond the agreement because the agreement is not going to be dispositive:

  • What is the nature of the relationship?
  • Where is this person going to be doing work? Is he going to be doing work on his own, at his own place of business or is he coming to your premises?
  • Who sets the hours? Is the contractor free to set the hours? Now, if they’re doing work for a facility that has set business hours, that’s one thing, but as a normal matter of fact, the contractor should be able to set his or her schedule.
  • Is the worker providing their own material?
  • If they employ other people, are they responsible ultimately for paying the people? 
  • Is the worker economically dependent on the business?

Training

The premise of hiring an independent contractor is that you’re bringing in somebody who has the requisite expertise to handle a particular job. By definition, the expectation is that person should not require training equivalent to what you would provide to an employee.

Obviously, there are exceptions where you may have a particular client or entity that has particular rules, but the bottom line is, if you are training somebody on how to do their job, that’s going to be strongly viewed as an employer-employee relationship as opposed to an independent contractor relationship.

Also, in dealing with the way they perform their work, how is that contractor holding themselves out? If she’s holding herself out as in any way associated with the person who contracts her, that’s a potential red flag. Examples include:

  • She has a uniform that has that company’s name;
  • She has business cards that have that company’s name; and
  • She has an email address that has the company’s name;

Those factors may very well be considered evidence of an employer-employee relationship.

The Big Picture

The big picture is that companies have to think carefully as to whether they are going to hire somebody as an independent contractor or as an employee. If they engage an independent contractor, are they going to be able to comply with the legal requirements that are being increasingly enforced? The reasons for the increased enforcement include:

  • Preventing exploitation of labor;
  • Preventing the growth of an underground economy;
  • Making sure employers pay their fair share of taxes;
  • Making sure injured workers are covered by worker’s compensation; and
  • Government recoupment of revenue not collected due to misclassification.

All these considerations put companies in a precarious position. Simply giving a worker a 1099 form at the end of the year or having them sign a piece of paper calling them an independent contractor isn’t going to be sufficient. At the end of the day, everything will be dependent upon a rigorous factual analysis, and any company that engages independent contractors has to be prepared to satisfy that increased scrutiny.

Alan Krystal

 

Alan Krystal

Alan H. Krystal, P.C.
631 780 6555
Alan@alankrystallaw.com

 

Leave a Reply

Your email address will not be published.