For businesses, classifying workers as independent contractors versus W-2 employees is a dangerous trap for the unwary. It is tempting for businesses to do so because they do not have to carry worker’s compensation insurance, pay payroll taxes, take tax withholdings, pay overtime, etc., for independent contractors.
However, the fact that a company and its worker agree that he or she is an independent contractor is not controlling. The most significant factor in determining whether the status of a person performing services for another is an employee or an independent contractor is the employer’s right to control the manner and means of accomplishing the result, that is, the details of the work.
Some of the factors that weigh in favor of finding that a worker is an employee are:
- the employer controls when the person reports to work
- the employer controls how long the person works
- the employer provides the person with a uniform or tools of the trade
- the employer controls the daily job assignments on which the person works
- the employer controls the means and methods the person uses to perform his or her job assignments
- the person works for the employer for a significant length of time
If businesses classify their workers as independent contractors when they do not meet the definition, they could be exposed to significant liability for failure to pay overtime, failure to keep time records, meal and rest break violations, and failure to carry worker’s compensation insurance.
The employment attorneys at Kring & Chung, LLP can help you determine whether you can treat your workers as employees or independent contractors.
Laura C. Hess is a Partner with Kring & Chung, LLP‘s Irvine, CA office. She can be contacted at (949) 261-7700 or [email protected]