More Myths About Hiring Independent Contractors
In a prior post titled Top Myths About Hiring Independent Contractors, we identified three common misconceptions about the use of independent contractors. The absence of clear-cut rules about the kinds of workers who are and aren’t appropriately classified as independent contractors continues to result in the misclassification of independent contractors by employers. Here, we identify three more common misconceptions about classifying workers as independent contractors that almost always lead to liability for employers.
Myth #4: There are some workers who are always independent contractors.
IT professionals and web designers are always independent contractors, right? Wrong. While more often than not there are probably certain types of workers at a certain type of startup who are more likely to be independent contractors, there is no one type of worker that will always be an independent contractor. In all cases, determining whether a worker is an employee or independent contractor is a fact-and-circumstances inquiry.
Myth #5: Commission-only workers are independent contractors.
How a worker is compensated is just one factor that is considered when determining whether a worker is an employee or an independent contractor. This includes commission-only payments, which in New York, can be used to compensate employees, not just independent contractors. (If you operate a New York business with commissioned employees, be aware that the New York Labor Law requires employers to have written employment agreements with their commissioned employees. The law is also specific as to what terms must be included in those employment agreements.)
Myth #6: Probationary, temporary, or seasonal workers are independent contractors.
Some businesses hire probationary, temporary, or seasonal workers and classify them as independent contractors, reasoning that because the relationship will be short-lived, the worker need not be placed on payroll. The length of the relationship is not grounds alone to treat a worker as an independent contractor. Rather, the whole relationship must be considered. Further, if a short-term worker is performing work substantially similar to the work performed by your business’s employees, it’s likely the short-term worker is also an employee.
These three misconceptions all involve clear-cut rules. As a whole, they serve as a reminder that there is no shortcut for determining whether a worker is an employee or independent contractor. Rather, how a particular worker should be classified requires a comprehensive inquiry unique to the worker and the business. If you’d like to learn more, please read Is Your Worker an Independent Contractor or Employee?, which outlines the kinds of factors that are considered when determining whether a worker is an employee or independent contractor.November 24, 2014 | Hiring, Independent Contractors, Wage and Hour