Employee or Independent Contractor

As a new business owner, you are being bombarded with an onslaught of new and oftentimes, conflicting, information when it comes to hiring new employees.

“How much do I have to pay them? What are my tax obligations? When am I required to pay them overtime?” These questions, and many others, are bound to come up over the course of the hiring process.

One common issue that is typically confusing to businesses is determining whether or not you have employees or independent contractors working for you. This is more than just a matter of finding the correct title. A misclassification of your workers also has substantial tax ramifications and potential penalties from the Department of Labor.

Here are a few questions to ask yourself when determining whether you have hired “employees” or “independent contractors”:

  • Do you instruct the person as to when, where and how work is performed?
  • Did you train the person to perform services in a particular way?
  • Is the person required to perform the work personally or can they have someone else do it for them?
  • Do you set the hours of work for this person?
  • Do you control the sequence or the order of the work performed?
  • Do you furnish tools or equipment for the person?
  • Does the person lack a “substantial investment” in facilities tools or equipment?
  • Do you have the right to discharge this person at will?
  • Can the person terminate the relationship without liability to you?

If you answered “YES” to any of these questions, please contact the business management professionals at Moresource today for further clarification before any promise of payment for services is made.

Moresource can help you make the correct determination in all hiring situations to help you avoid the pitfalls of potential misclassification!