HIRING: Independent Contractors
By Stephanie C. Harper, PHR
Congratulations! You've started a business and things are going pretty well. So well that you need some help! You look over your profits and decide you can pay at least $10.00 per hour. You decide you need someone to help answer phones, assist with scheduling, make a few sales calls, work with your clients and yes, run a few errands. Employers who find themselves needing additional help frequently retain the services of what they call an independent contractor. There is only one problem; these are truly employees. While, there is no true definition of an independent contractor, administrative agencies and courts generally look at the nature of the relationship between the parties.
Here are 5 true-tale indicators that an employer-employee relationships exists:
1. Set Work Hours, permission for time off
2. Instructions on when, where, and how to do a job
3. Providing facilities, equipment, tools or supplies
4. Salary, Rate of Pay, Draw against Commission
5. Reimbursements/allowances for business or travel
Simply providing an individual with a business card or other means of identification as a representative of your organization can place them in the "employee" classification. Keep in mind, "paying" a person, as a 1099 does not automatically equal 1099 status. In fact, you may be setting yourself up for investigations. If during the investigation, employers who are found to have misclassified an employee as an independent contractor, can be held liable for pack bay of benefits (normally due to an employee), liable to pay employer required state and federal taxes, fines and penalties. And if that was not enough, once an investigation occurs, many state agencies will notify the IRS, which triggers an additional audit. YIKES!!!!!
Regardless to the size of your business, employers must understand how to properly classify any one hired. To make it simple, if you have a significant amount of say over what someone else does for you... uh, that might be an employee!
Stephanie C. Harper, PHR, CCP, CHRM is an author, career expert, speaker and radio host in Atlanta, GA. She has worked in human reesources for more than 17 years and is also the Editor and Publisher of CAREER Magazine.
www.TheCareerMag.com
Posted By: Pam Perry
Thursday, June 3rd 2010 at 12:01AM
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