Q: I basically need to know what you can and cannot require of your independent contractors.
Currently, I work for a company as an HR representative that does not have any employees, but only independent contractors. The owner recently implemented a new policy. This policy includes some points that i believe teeter along the lines of formal employment. For clarification, these independent contractors are not doing any tangible work for a project or painting a house, or doing any task with measurable progress. They are selling perfumes and colognes. The first concern that I have is they have to request time off. Additionally, when they request time off they are required to “make up” their hours but they’re not getting paid hourly. Another point of concern is that they have to tell the owner the reason that they are taking time off. They’re also required to show up scheduled shifts. They’re also penalized for not completing their shifts. Plus a couple of other points that are concerning.
A:
Hello, your question is a very common one. This is not legal advice specific to your situation, but may be helpful as you continue to frame your question and seek a Labor & Employment Law attorney to help you.
In general, the IRS publishes a few resources to help businesses classify employees as independent contractors or traditional employees. Start here: https://www.irs.gov/pub/irs-pdf/p1779.pdf
Other resources are on the IRS website at:
https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee
The IRS has complex laws and a massive body of judicial holdings that factor into the classification of employees. However the IRS also has a reasonably friendly website with plain-language advice. Taken from the IRS website: "[W]hether these people are independent contractors or employees depends on the facts in each case. The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. ... If an employer-employee relationship exists (regardless of what the relationship is called), then you are not an independent contractor and your earnings are generally not subject to self-employment tax. However, your earnings as an employee may be subject to FICA (social security tax and Medicare) and income tax withholding."
https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-defined
Unfortunately, given the very sensitive nature of Labor & Employment Law, and the fact that employee classification is situational, it will be hard to offer more advice of a general nature that might help you. But your concerns are valid; incorrect classifications of employees can be costly or even terminal to a business. Seek a Labor & Employment attorney in your area and ask for help.
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