The distinction between employee and independent contractor is difficult for even a seasoned employer. It is also a touchy subject that gets a lot of employers in trouble. The IRS has established guidelines, but unfortunately, most determination are on a case-by-case basis. All we can do is look at the guidelines and try to make the best decision possible. Consulting with an attorney could be important if you have any questions, because the consequences for improper classifications are severe. This classifications change the way an employer deals with document filing requirements (1099 or W-2), federal tax withholding requirements, and benefits/wages.
While the determinations are done on a case by case basis, a few of the things we can look at to make an evaluation are:
- Paid by salary or hourly
- Receive training from employer
- Often work for one company
- Receive employee benefits
- Receive equipment/tools
- Required to work set hours
- Critical company work
Independent Contractor Characteristics
- Paid by the job or by project
- Employee controls how work is done
- Employee works for multiple companies
- No benefits from employer
- Employee provides their own equipment
- Can set their own hours
- Project-based work
Chad Stonebrook will be giving an Employment Law Update at a Lunch & Learn presented by Lardiere McNair on September 14, 2016 at Heritage Golf Club to provide more information on this topic. Please let us know if you are interested.
Chad Stonebrook is an Associate at Lardiere McNair, LLC. To read more about our firm, please visit www.lmcounsel.com.
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