In a world where remote work and gig work have become commonplace, your business has more options for securing workers than ever before. And some of those options can save your business a significant amount of money. For example, classifying a worker as an independent contractor can save you from paying taxes, providing benefits, and securing a workspace for that worker.
As tempting as that may sound, though, you have to be careful as you navigate this employment market, as a misstep in worker classification can lead to legal action that can prove costly. Therefore, as you try to determine the best way to handle your workers, you may want to take the following factors into consideration, each of which will be analyzed by a court should your case go to trial:
- Control: First, you’ll want to consider how much control you have over the worker. Are you specifying when and where they will work? Do you dictate how their work is to be performed? If so, then this factor tips the scales in favor of the worker being classified as an employee.
- Supervision: If you maintain a significant amount of supervision over the worker, then the worker may be classified as an employee. So, think carefully about how you monitor the worker’s performance and how you control the quality of his or her work, if you do at all.
- Required skill: A court will also assess the amount of skill that’s required for the job and whether those skills have to be developed on the job. Workers who are in high skill occupations are more likely to be deemed employees, especially if they learn those skills from you while on the job.
- Who pays for operations: There’s a lot that goes into an worker’s tasks, including a workplace, equipment, maintenance, supplies, and even licenses. If you’re paying for all of that, then you’re more likely to be considered the worker’s employer. If the worker pays for a lot of those aspects of his or her duties, though, then there’s a stronger argument to be made that he or she is an independent contractor.
- Payment and benefits: You’ll also want to consider how the worker is paid and whether he or she receives benefits. Providing benefits will support a showing that the worker is an employee, whereas paying by the project and not providing benefits is an arrangement that is seen more often in the independent contractor context.
- Length of the job: Although not dispositive, the length of the work itself can be indicative of whether an employer-employee relationship exists. The longer the job, the more likely the worker is to be considered and employee. Keep in mind, too, that expectations can be significant here, too. Independent contractors really shouldn’t be expected to keep working for you beyond the length of the assignment given to him or her unless there is an express understanding that a rotation of projects will be provided and accepted on a voluntary basis.
Don’t let misclassification derail your business
Improper classification of workers can be extraordinarily costly for your business, especially if you’re found to have been misclassifying multiple workers for a significant period of time. That’s why you need to be diligent in developing your work arrangements with those who are performing duties for you. You’ll want to address each of the factors identified above and be able to articulate why you think that your workers are independent contractors, if that’s the direction that you choose to go. If you’d like assistance in figuring out how to go about doing that, then we encourage you to discuss the matter with a legal team that can guide you through the process.