Q: Looking for help in differentiating between independent contractors and employees.
Hello -- I am a startup founder in NYC looking for an employment lawyer who can answer a few clarification questions about our hiring. We are an app-based cleaning company hiring independent contractors as cleaners that will be matched to customers on our platform. The contractors choose their own schedules, have no direct supervision, and will work only 20-30 hours a week. However, they are not able to set their own rates as our app is built to show one hourly rate. Does this then qualify them as employees instead of independent contractors? We do not want to run into any complications in the long-run and want to make sure.
A: This link may answer most of your questions:
I recall litigating this issue years ago on appeal. My client, who was paid 4 figures a day, had a written contract establishing them as an independent contractor. Both the employer and employee agreed in writing that this 4-figure daily pay person was independent. They were not.
"Control" determines independence. You may find that the control you have over these persons will make them employees regardless of what you and they agree to be called. Retain an employment lawyer to analyze their insurance payments, licenses, business accounts, public advertisements, skills, tools and supplies, and actual control over when, how, and where they work, who they hire, and how they are paid. Such an analysis might document their true independence, control and genuine assumption of risk or maybe not. Generally, workers in the same industry as those who pay them are usually employees. For example, plumbing companies who hire plumbers do so as employers. A plumber may hold his own local license but even they are often not truly independent. Most do not control their own profits or losses. They do not bid on jobs themselves. If a bid turns out to be too low, the individual plumber is not the one who absorbs the loss. They are not in control. If a plumber floods a customer's home or accidentally burns it down with a torch, the individual plumber is usually not responsible. And if the plumber loses a limb on the job, their "true" employer's workers compensation insurance picks up the tab, regardless of whether they agreed to be called "independent" by contract.
Tim Akpinar agrees with this answer
A: Employees are paid a regular wage, receive employee benefits, have taxes withheld from those wages, and they have their work time, location and schedule dictated by the employer.
Independent contractors are paid for projects and pay their own taxes. They work when and where they want. For tax purposes, the IRS considers them to be self-employed, which means they have to pay self-employment tax.
The main difference is the degree of control the employer has over terms and conditions of employment : if the employer directs all the terms over time, the person is probably an employee.
Disclaimer* This is an opinion of an employment attorney and not legal advice. Please do not rely on the information set forth above. If you need legal advice, please contact an experienced employment attorney. I am happy to help.
Tim Akpinar agrees with this answer
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