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The Equal Employment Opportunity Commission (EEOC) has released two revised publications addressing the rights of veterans with disabilities under the Americans with Disabilities Act, the agency announced Feb. 28.
The revised guide for employers explains how legal protections for veterans with disabilities differ under the ADA and the Uniformed Services Employment and Reemployment Rights Act and how employers can prevent disability discrimination and provide reasonable accommodation, EEOC said. The guide includes information on organizations that can help employers with finding qualified veterans for jobs and with researching accommodations.
The revised guide for wounded veterans answers questions that veterans with service-connected disabilities might have about the ADA and about their legal rights when seeking to return to their former jobs or enter the civilian labor force, EEOC said. The publication also explains the types of accommodations that might be necessary to help veterans with disabilities obtain and successfully maintain employment.
Both publications are available on EEOC’s website. They update guides that originally were posted in February 2008.
The revised guides reflect changes stemming from the ADA Amendments Act, which took effect Jan. 1, 2009, and makes it easier for veterans with a range of impairments, including traumatic brain injuries and post-traumatic stress disorder, to receive reasonable accommodations that will allow them to work, EEOC said.
Last November, EEOC heard testimony at a public meeting about the unique needs of veterans with disabilities in making the transition to civilian life. The challenges faced by such veterans in obtaining employment are receiving increased attention as more troops return from service in Iraq and Afghanistan, EEOC said.
Over the past 10 years, 3 million veterans have returned from military service and another 1 million veterans are expected to return to civilian life over the next five years, EEOC said. The Labor Department’s Bureau of Labor Statistics in October 2011 said unemployment for post-9/11 era veterans was hovering around 12 percent, more than 3 percentage points above the overall unemployment rate, EEOC said. 02.29.2012
The increasing use of surveillance in the workplace requires employers to balance their need for monitoring with the privacy concerns of employees. With the use of radio-frequency identification (RFID) technology as applied, for example, in a hospital, an employer today can track how quickly a nurse or technician responds to a patient call and determine where all employees are in case of an emergency. Although RFID, in this case, was originally was meant to monitor quality of care, it can also be used to respond to allegations of neglect made by patients.
Due to technology advances over the past decade, many mid- to large-sized employers today use employee monitoring technology of some type with almost no notice by employees. However, workplace surveillance and monitoring are becoming the subject of workplace disputes as more employers implement RFID, global positioning systems (GPS), and biometric technology to monitor the movement of goods and people.
The different forms of monitoring can be used to track the location of an employee, either within a workplace using RFID or anywhere in the world using GPS or even to identify who a worker is in case of biometric surveillance.
With the increased monitoring comes very little regulation in the U.S. so far. However, workplace privacy concerns have received more attention in other countries with laws passed in Australia, Canada, and the European Union to regulate how information is gathered and what is done with the data.
Although such technology tools as RFIF, GPS and biometric surveillance was never originally intended to infringe on worker privacy, it has become a concern for many people these days who feel that employers are not weighing the privacy concerns of workers when they introduce new surveillance technology. In addition, vendors are primarily selling the technology as a way to monitor workers rather than improve customer
service.
On the other hand, there is nothing stopping employers from using the technology to monitor workers. In essence, employees in the U.S. should have no expectation of workplace privacy except for protection against videotaping of bathrooms and dressing rooms.
In addition to the constant monitoring of workers in many different ways, the other bigger concern is that of the massive amounts of data that are being collected with these technologies which are often stored by third-party providers. In fact, as we’ve already had witnessed to with many high profile cases, data breaches could mean personal information—including Social Security numbers and private medical records—could be vulnerable. In other words, who is watching the watchers!
Going forward, employers will need to adapt to the rapid development of communications technologies by developing technology policies that are fully explained in a practical way. As of right now, most employers have established company policy regarding internet and e-mail use on company-owned computers and phones. However, as employers incorporate new technology with company property, such as GPS programs and devices in phones and vehicles, they will need to carefully prepare clear policy statements that honestly and accurately inform employees about the limits of their personal privacy at work.
Any policy addressing workplace monitoring should establish that the employer owns the computers, phones, vehicles, or other equipment, and clearly tells the employee that he/she has no expectation of privacy in communications sent with the equipment, even if the employee marks a file as private or attaches a password to a computer file. In addition, there is a need for the employer to train both managers and employees about company standards of workplace behavior and the limited personal privacy that may be available when an employee uses communication equipment provided by
the employer.
In general, an employer can monitor employee usage of employer electronic communications systems and devices. The following are a few recommendations for an employer when developing an employee monitoring policy:
- Clearly inform employees in policies and through training that the company will monitor employee usage of employer electronic communications systems and devices.
- Clearly describe access to employee corporate e-mail accounts or other computer files by employers or law enforcement under certain appropriate circumstances.
- Clearly inform employees in policies and through training that employees should have no expectation of privacy when using employer electronic communications systems and devices.
- Consult with your legal counsel especially if you allow employees to use employer electronic communications systems and devices for personal reasons or to access personal accounts or sites via the internet as such personal use could interfere with employer monitoring.
- Although the U.S. is behind many other industrialized nations in regulating workplace privacy, you should always check with specific state requirements on regulations regarding the monitoring of electronic communications.
| 03/21/2012 | ||
| 2:00 pm | to | 4:00 pm |
Please join us on Wed., Mar. 21, 2012 for a seminar on Labor Law Update – conducted in Japanese by Mr. Munero Ueda, HRM Partners, Inc.
This seminar will be conducted between 2:00 p.m. and 4:00 p.m. The location will be at HOLIDAY INN EXPRESS at 2120 South Arlington Heights Road, Arlington Heights, IL 60005.
This is a “no charge” seminar. However, due to limited seating, you must contact Mr. Ryota Mitsugi at rmitsugi@hrm-partners.com.
On February 22nd, President Obama signed legislation to extend emergency unemployment insurance benefits through 2012 and makes various changes to the UI program, such as decreasing the amount of available weeks of benefits.
As part of a larger payroll tax extension and Medicare fix package, the law overturns a 1960s-era Labor Department ban on states’ screening and testing UI applicants for illegal drugs.
The new law permits all states to screen any UI applicants who either lost their job because of drug use, or are seeking a job that generally requires a drug test.
The law cuts 30 weeks of total benefits, by September, in states with an average unemployment rate of between 8 percent and 8.4 percent from 93 maximum weeks to 63 maximum weeks.
The cost of the UI extension is estimated at $30 billion, which the law offsets by spectrum auctions, and by requiring new civilian federal employees and members of Congress to contribute more toward their defined benefit pension programs.
Under the bill, new federal employees—defined as those hired after Dec. 31, 2012—will help pay for the extension of emergency UI benefits by contributing an additional 2.3 percent of their salaries toward their retirements. The provision also will apply to those
who become new members of Congress after Dec. 31, 2012.
Federal executive branch employees currently contribute 0.8 percent of their salaries toward the defined benefit portion of the Federal Employees Retirement System, meaning that new employees will pay a total of 3.1 percent of their salaries toward their retirement. The increased retirement contributions will be permanent.
The law includes the following decreases in available unemployment compensation benefits:
- In states with an unemployment rate of under 6 percent, the law reduces the number of available weeks from 60 to 40.
- In states with an unemployment rate of between 6 percent and 6.4 percent, the law reduces the number of available weeks from 73 to 54.
- In states with an unemployment rate of between 6.5 percent and 6.9 percent, the law reduces the number of available weeks from 86 to 54.
- In states with an unemployment rate of between 7 percent and 7.9 percent, the law reduces the number of available weeks from 86 to 63.
- In states with an unemployment rate of between 8.5 percent and 8.9 percent, the law reduces the number of available weeks from 99 to 63.
- In states with an unemployment rate of 9 percent and above, the law reduces the number of available weeks from 99 to 73.
In addition, the law creates new cost-neutral “waiver” authority, permitting states flexibility in how they can use UI benefit funds for promoting pro-work reforms.
The law also, for the first time, creates national job search requirements for everyone collecting state and federal UI benefits, from the first through the last week of benefits.
The law requires re-employment eligibility assessments for every long-term unemployed person who begins collecting federal UI benefits, to determine what services and activities they need to return to work. The law provides states nearly $1 billion in new,
time-limited funds to assist the long-term unemployed, partially unemployed and self-employed.
To rein in overpayments, the law requires states to reduce current state and federal UI benefit checks to recover prior overpayments of UI benefits, in order to more quickly and effectively recover the current $12 billion in annual UI overpayments.
02.26.2012
The number of Americans who applied for first-time unemployment benefits dropped again recently to the lowest level in almost four years, providing additional evidence that the national economic recovery is picking up steam. In the week ending February 11, the adjusted initial unemployment claims was 348,000, a decrease of 13,000 from the previous week’s revised figure of 361,000. The 4-week moving average was 365,250, a decrease of 1,750 from the previous week’s revised average of 367,000.
The latest numbers being reported are at the lowest level since March 2008, when the U.S. was in the early stages of the last recession and the trend strongly indicates that fewer people are losing their jobs and more are finding work.
The latest national unemployment rate for January 2012 was reported at 8.3% on February 3, 2012. The highest national unemployment rate reported during the past recession was 10.0% for October 2009. The U.S. unemployment rate remained at a level well above 9.0% throughout 2010 before it began a slow decline during 2011. 02.21.2012
Collaboration between state and local enforcement agencies and advocacy groups was credited on Feb. 15 with helping workers at two San Francisco area Asian restaurants to recover $316,000 in back wages and tips, and for missed meal and rest breaks.
The Chinese Progressive Association, the Progressive Workers Alliance, and the Asian Law Caucus said collaborative efforts between the California labor commissioner, the San Francisco Office of Labor Standards Enforcement, and the San Francisco Public Health Department were responsible for getting the workers their wages.
Under San Francisco’s wage theft ordinance, whose enactment the groups backed, employers can be fined up to $1,000 for failing to pay the city’s minimum wage, which is $10.34 per hour this year. The California Department of Industrial Relations Division of Labor Standards Enforcement said the eight workers at Pho Clement and Pho Clement 2 restaurants will receive amounts ranging from $17,432 to $85,114. 02.21.2012
On February 9, 2012, a federal district court in California ruled that the Equal Employment Opportunity Commission can proceed to trial with claims that a former attendance policy at a Dillard’s Inc. store in El Centro, CA. violated the Americans with Disabilities Act because it required employees to disclose the nature of their medical conditions in order for health-related absences to be excused. (EEOC v. Dillard’s Inc., S.D. Cal., No. 08-01780, 2/9/12).
Denying Dillard’s motion for summary judgment, the U.S. District Court for the Southern District of California said a reasonable jury could find that the attendance policy, which the company rescinded in July 2007, contained a disability-related inquiry prohibited by the ADA.
By asking employees to disclose the nature of their absences and the conditions for which they sought treatment, the company’s inquiry “may tend to reveal a disability,” the court said. Furthermore, Dillard’s failed to present evidence that the question is job-related and consistent with business necessity, it added.
According to the court, Dillard’s opened the El Centro store in March 2005. Its attendance policy at that time provided that employees would not have their health-related absences excused unless they submitted doctor’s notes stating “the nature of the absence (such as migraine, high blood pressure, etc. … .).”
Three employees—Corina Scott, Irma Moreno, and Allyson Mazon—each claimed that Dillard’s management would refuse
to accept doctor’s notes that did not state their medical conditions and would require more specific notes to verify that they had legitimate medical reasons for absences.
After Scott voiced her belief that she did not need to disclose her medical condition, Dillard’s fired her in June 2006 for accumulating too many unexcused absences. Meanwhile, Moreno was discharged in May 2007 because she did not return from leave, while Mazon voluntarily resigned in February 2006.
Dillard’s rescinded its attendance policy in July 2007 and replaced it with one that no longer required a doctor’s note stating an employee’s medical condition.
Scott filed a bias charge with EEOC in June 2006, and the commission subsequently brought suit against Dillard’s in September 2008 on behalf of Scott and “others similarly situated.” EEOC sought compensatory and punitive damages and injunctive relief.
The court noted that Dillard’s may avoid liability under the ADA if it demonstrates that its absence policy was job-related and consistent with business necessity.
However, this burden is “quite high,” the court said, and Dillard’s failed to present evidence that it “needed to know the nature of the employee’s medical condition because of excessive absences or in order to protect the health and safety of its other employees.”
Additionally, the company “makes no attempt to explain why it is necessary for the doctor’s note to state the medical condition for which an employee is being treated,” it said.
The court also pointed out that Dillard’s rescinded in 2007 the policy at issue. “If the Policy was indeed job-related and a matter of business necessity, Dillard’s has failed to explain how it is now able to operate as a business without such policies,” the court
said. 02.21.2012.
| 03/02/2012 | ||
| 1:30 pm | to | 4:30 pm |
HRM Partners will be conducting a seminar in conjuction with The Japanese Chamber of Commerce of Georgia & Mr. Toshi Akiyama of American Data Bank.
The seminar will be conducted on Fri., Mar. 2, 2012 between 1:30 pm and 4:30 pm. Location will be Consulate-General of Japan in Atlanta at One Alliance Center 16 Floor, Suite 1600, 3500 Lenox Road, Atlanta, GA 30326 .
Mr. Munero Ueda will talk about important points about important points about employee discipline and termination in Japanese.
One of the hottest topics in the HR world currently is that of independent contractors and whether they are misclassified and should be employees. Although there are loads of test to help you figure that out, the problem is that there are too many tests from too many sources and many employers get confused and don’t want to wade through all the documentation. Although it’s not the only source, one of the best ways to get an idea if you have a problem on your hand is to take a look at the following questions that come out of the Internal Revenue Service 20-Factor test. Although the 20-factor test has been updated in recent years to become an 11-factor test, this test is still very relevant.
| FACTOR | QUESTION TO EMPLOYER |
COMMENT |
| Factor 1 Instructions |
Do you have control on determining when, where & how work is done? |
A worker who is required to comply with other persons’ instructions about when, where, and how he or she is to work is ordinarily an employee. This control factor is present if the person or persons for whom the services are performed have the right to require compliance with instructions |
| Factor 2 Training |
Do you provide company training to the worker? |
Training a worker by requiring an experienced employee to work with the worker, by corresponding with the worker, by requiring the worker to attend meetings, or by using other methods, indicates that the person or persons for whom the services are performed want the services performed in a particular method or manner. |
| Factor 3 Integration |
Is the work performed by the worker a key part of your business operation? |
Integration of the worker’s services into the business operations generally shows that the worker is subject to direction and control. When the success or continuation of a business depends to an appreciable degree upon the performance of certain services, the workers who perform those services must necessarily be subject to a certain amount of control by the owner of the business. |
| Factor 4 Services Rendered Personally |
Do you insist that one particular person perform the work? |
When an employer is insisting that a particular person perform the work, it can be strongly assumed that the work performed is being controlled by the employer. However, when the worker retains control over such things as hiring, supervising & paying helpers, the situation looks more like an independent contractor relationship. |
| Factor 5 Hiring Assistants |
Do you hire, supervise and pay a worker’s assistants? |
If the person for whom the services are performed hires, supervises, and pays assistants, that factor generally shows control over the workers on the job. However, if one worker hires, supervises, and pays the other assistants pursuant to a contract under which the worker agrees to provide materials and labor, and under which the worker is responsible only for the attainment of a result, this factor indicates an independent contractor status. |
| Factor 6 Continuing Relationship |
How long have you employed the worker? |
The longer the business relationship continues, the more likely the worker is an employee. The shorter the business relationship continues, the more likely the worker is an independent contractor. |
| Factor 7 Set Hours of Work |
Do you require the worker to work certain hours at your worksite? |
The establishment of set hours of work by the Employer is a factor indicating control and therefore strongly indicating the person is an employee. The more a worker has control over their hours and work schedule indicates an independent contractor. |
| Factor 8 Full Time Work Requirements |
How much time do you require the worker to devote to your operation? |
If the worker must devote substantially full time to the business of the person for whom the services are performed, such person has control over the amount of time the worker spends working and impliedly restrict the worker from doing other gainful work. An independent contractor, on the other hand, is free to work when and for whom he or she chooses. |
| Factor 9 Working on Employer Premises |
Must the worker perform work activities at your physical business location? |
If the work is performed on the premises of the person for whom the services are performed, that factor suggests control over the worker, especially if the work could be done elsewhere. Work done off the premises of the person receiving the services, such as at the office of the worker, indicates some freedom from control. However, this fact by itself does not mean that the worker is not an employee. The importance of this factor depends on the nature of the service involved and the extent to which an employer generally would require that employees perform such services on the employer’s premises. Control over the place of work is indicated when the person or persons for whom the services are performed have the right to compel the worker to travel a designated route, to canvass a territory within a certain time, or to work at specific places as required. |
| Factor 10 Order or Sequence Set |
Does the worker need to follow your business process or do they have the flexibility to decide how to accomplish the work? |
If a worker must perform services in the order or sequence set by the person for whom the services are performed, that factor shows that the worker is not free to follow the worker’s own pattern of work but must follow the established routines and schedules of the person for whom the services are performed. Often, because of the nature of an occupation, the person for whom the services are performed does not set the order of the services or sets the order infrequently. It is sufficient to show control, however, if such person or persons retain the right to do so. |
| Factor 11 Reports |
Do you require the worker to submit regular reports? |
A requirement that the worker submit regular or written reports to the person for whom the services are performed indicates a degree of control. |
| Factor 12 Payment Method |
How do you pay the worker? | Payment by the hour, week, or month generally points to an employer/employee relationship. Another strong indication that the worker is an “employee” is when the employer provides benefits such as insurance to the worker. An independent is generally paid by the job, project, assignment, etc., or receives a commission or similar fee and has his/her own established benefits program. |
| Factor 13 Expenses
|
Do you reimburse the worker for business and/or travel expenses? |
If the employer ordinarily pays the worker’s business and/or travel expenses, there is a strong indication that the worker is an employee. An employer, to be able to control expenses, generally retains the right to regulate the worker’s business activities. |
| Factor 14 Tools & Materials
|
Are you providing the worker with an office, internet, computes, tools to accomplish work? |
The fact that the person for whom the services are performed furnishes significant tools, materials, and other equipment tends to show the existence of an employer-employee relationship. |
| Factor 15 Significant Investment |
Does the worker have their own office facilities to conduct business besides your office? |
If the worker invests in facilities that are used by the worker in performing services and that are not typically maintained by employees (such as the maintenance of an office rented at fair value from an unrelated party), that factor tends to indicate that the worker is an independent contractor. On the other hand, lack of investment in facilities indicates dependence on the person or persons for whom the services are performed for such facilities and, accordingly, the existence of an employer-employee relationship. Special scrutiny is required with respect to certain types of facilities, such as home offices. |
| Factor 16 Realization of Profit or Loss
|
Does the worker receive set wages? | An employee may be rewarded, disciplined, demoted or fired depending on their job performance; However, an independent contractor can realize a profit or incur a loss from his/her work. |
| Factor 17 Working for More than One Business |
Does the worker perform work for other people besides you? |
If a worker performs various services for a multiple of unrelated persons or firms at the same time, that factor generally indicates that the worker is an independent contractor. However, a worker who performs services for more than one person may be an employee of each of the persons, especially where such persons are part of the same service arrangement. |
| Factor 18 Availability of Worker’s Services |
Does the worker offer his/her services to the public? |
The fact that a worker makes his or her services available to the general public (e.g., internet, newspaper, TV advertisement) on a regular and consistent basis indicates an independent contractor relationship. |
| Factor 19 Employer’s Right to Fire Worker |
Can the worker be fired “at will” or does he/she have a contract with term and requiring him/her to produce certain results. |
The right to discharge a worker is a factor indicating that the worker is an employee and the person possessing the right is an employer. An employer exercises control through the threat of dismissal, which causes the worker to obey the employer’s instructions. An independent contractor, on the other hand, cannot be fired so long as the independent contractor produces a result that meets the contract specifications. |
| Factor 20 Worker’s Right to Quit |
Can the worker end the working relationship without any liability? |
If the worker has the right to end his or her relationship with the person for whom the services are performed at any time he or she wishes without incurring liability, that factor indicates an employer-employee relationship as opposed to a contractual relationship that specifies a term beginning and end date. |
The subject of who is an “independent contractor” and who is an “employee” has become an important topic over the past few years. With the explosive increase in the use of independent contractors by private employers, state and federal governments, with a concern on evaporating tax revenues, are placing increased pressure on employers to classify their workers correctly. Recently, California State updated their labor codes to place severe monetary and non-monetary penalties on employers that willfully misclassify their workers as independent contractors. In addition, The U.S. Department of Labor has also recently announced that it has joined up with 12 U.S. states to coordinate efforts to combat the intentional misclassification of workers by employers seeking to reduce their costs.
The question whether a worker is an independent contractor or an employee is one that is determined through a review of the facts of any particular case along with the application of law and regulations for worker classification issues known as “common law.”
Common law flows primarily from court decisions. Under common law, the treatment of a worker as an independent contractor or an employee originates from the legal definitions developed in the law and depends on the employer’s right to direct and control the worker in the performance of his/her duties. Section 3121(d) (2) of the Internal Revenue Code provides that the term “employee” means any individual defined as an employee by using the usual common law rules.
Following this standard, an employment relationship or “employee” exists if the principal has the right to direct and control the worker who performs the services. Control exists where the employer influences not only the results to be accomplished, but also
the means and details by which the results are to be accomplished. That is, where the worker is subject to the will and control of the principal not only as to what is to be done, but how it shall be done.
On the other hand, an independent contractor is a worker or business entity that provides a good and/or service to another individual or business entity under the terms of a specified contract. The independent contractor is not subject to the employer’s control or guidance except for what is designated in a mutually binding agreement. The contract for a specific job usually entails the outcome of the good and/or service rather than the process or methods to fulfill the job. Under Department of Treasury Regulation 31.3401(c)-1, “physicians, lawyers, dentists, veterinarians, contractors, subcontractors, public stenographers, auctioneers, and others who follow an independent trade, business or profession in which they offer their services to the public” are usually considered independent contractors. If a service requires special skill, any specialist called in to perform the task is usually an independent contractor.
For many years the Internal Revenue Service (IRS) used a 20 Factor Test to determine as whether an individual was an employee or independent contractor. However, more recently the IRS, took the 20 Factor test and combined the factors into three broad categories that contain 11 factors. With IRS Publication 1779, Independent Contractor or Employee . . . the IRS details the three categories that include: (a) behavioral control; (b) financial control; and (c) Relationship of the Parties.
The common law test and its IRS factor and control tests may be the most well-known tests for determining worker status. However, in enforcing the Fair Labor Standards Act (“FLSA”), which contains federal minimum wage and overtime requirements, the U.S. Department of Labor (“DOL”) looks instead to the “economic reality” of the relationship and considers the following factors to be significant: (1) the extent to which the services rendered are an integral part of the employer’s business; (2) the permanency of the relationship; (3) the amount of the worker’s investment in facilities and equipment; (4) the nature and degree of control by the employer; (5) the worker’s opportunities for profit and loss; (6) the amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor; and (7) the degree of
independent business organization and operation.
Then, there’s the U.S. Courts. They use approximately 10 factors to determine if a worker is an employee or independent contractor. Many of the factors used by the courts are also used by the IRS. The common law test puts emphasis on who controls or directs the means or methods of work, like the IRS test.
The different tests and many factors considered in determining worker status create uncertainty for businesses. However, this
uncertainty is reduced to some degree by the many published federal court decisions and IRS and DOL opinion letters and rulings over the years. Many companies take some comfort in knowing that federal courts and agencies have examined and accepted similar independent contractor relationships. For federal law purposes at least, businesses are often able to model their independent contractor relationships based upon what upon courts, the IRS and/or DOL have said is correct. Moreover, businesses can go further and request formal determinations from the IRS concerning worker status by submitting an IRS Form
SS-8 (Determination of Employee Work Status for Purposes of Federal Employment Tax Obligations).
The last consideration with defining who is an independent contractor versus an employee is that of the individual U.S. states. Unfortunately, the situation gets more complicated and problematic for businesses when different states in which they operate establish their own tests for determining worker status. There are increasingly more states with statutes, legal standards as well as major initiatives established to define what constitutes an independent contractor. Although many of the statutes and
standards set up by individual states have similarities with the major rules already established under common law, you should check with your individual state to check for any additional factors or contradictions.
Finally, we come to what can an employer do. The following are a few recommendations to consider:
- To determine if a worker you want to employ as an independent contractor qualifies, you should first review the IRS 11-Factor Test. You can easily do an internet browser search by typing “IRS 11-factor test for independent contractors” and get several examples of the test. Reviewing this test should give you fairly good idea of what you’re dealing with. In addition, you should check your individual state’s laws to see if they define independent contractors. In most cases, an individual state that has its own definition will have some variation of what is done at the IRS, Department of Labor or within the courts.
- If you have a worker that qualifies as an independent contractor, you should formally define the relationship in an independent contractor agreement. Also, you should use the appropriate tax forms including the W-9 and 1099.
- It’s probably not a good idea to hire former employees as independent contractors. This is especially relevant if you hire them to perform the same work. Unless they can meet most of the independent contractor requirements, your risk chances are high if you get caught.
- Use independent contractors only for work that isn’t part of your core business. The reason for this gets threaded back to the IRS 11-factor test. One of the factors asks the question, are the services performed by the contractor a key aspect of the regular business of the company? If so, there’s a strong indication of an employer/employee relationship.
- For any contractor that you use, they should have their own business in place such as a formal business name, business cards, an office, advertisement to the general public, and other customers. This is a strong indication that they are truly an independent contractor.
- Independent contractors are not generally paid for their time but rather by the job to be done. Also, you shouldn’t pay a contractor benefits or reimburse specific expenses like you pay a regular employee. It’s up to the contractor to come up with a contract for their fees that include the compensation they need for their own business expenses.
- An independent contractor has control of their time. If you require the contractor to report to your office for a set schedule, you have little chance that you will be successful to win a misclassification challenge.
- An independent contractor has control and judgment over their work. In general, a contractor decides when, where and how to accomplish the task which they have been contracted for.