Independent Contractor Determination

Photo credit: Jirsak / shutterstock.com

When an organization hires workers, they are either classified as independent contractors or employees. It’s important that you make the correct determination, since employers can label their workers as independent contractors when they are actual employees. In such a case, the employer does not have to pay the minimum wage and payroll taxes. In addition, he or she may not reimburse the worker any funds spent when performing duties. Today, the State of California has imposed strict fines and penalties to any employer who misclassify his or her employees. Before you classify your worker as an independent contractor, it’s recommended that you familiarize yourself with factors that government agencies use when classifying a worker as an independent contractor.

Who is an independent contractor?

They perform duties using specialized skills and are not part of the company’s regular business. Further, they determine the time they spend to perform their duties. The less control an employer has on how an individual performs his or her work, the higher the probability that he or she is an independent contractor.

Independent contractor determination

There are different government agencies that use their own test to identify if someone is an independent contractor. They use the same basic concept although they can differ slightly. First, they analyze the control the worker has. If the employer controls why, when and how the worker completes his tasks, then he is an employee. However, if the employer has limited control on how the worker performs his duties, then he is an independent contractor. Secondly, if an employer supervises the worker strictly, then he’s an employee. If the employer has limited control over the worker, then he’s an independent contractor. Thirdly, if a worker does not form an integral part of the employer’s business, he’s an independent contractor.

What you should do if you have been misclassified

If you are an employee and your employer has been treating you as an independent contractor, you should file your case with an agency. You will be assisted in collecting unemployment insurance and wages. On the other hand, the employee can seek legal advice from United Employees Law Group attorneys to enforce his or her rights.

What should employers do to mitigate potential misclassification?

Determination requires exercising sound judgment. The business should come up with a written agreement which describes the scope of work, timing, compensation, and tax obligations of the worker. In addition, the employer should ensure if a worker is an independent contractor, he or she has a pertinent license that is up to date.