As an employer, you work with different types of people who provide services to your company. This may include employees, independent contractors, seasonal hires, interns, or joint venturers.
It is important to be clear on the status of your workers. If you categorize employees as independent contractors, you will run afoul of the Department of Labor. To avoid this, contact a Johns Creek employee misclassification lawyer and discuss your unique situation. A skilled attorney at Sparks Law could discuss your hiring practices to make sure you understand the difference between contract labor and employees.
Employees receive W-2s at year’s end, which discloses the taxes and other deductions an employer withheld during the year. Independent contractors are issued 1099s disclosing the amount paid with no taxes withheld because the contractor handles that aspect. Employees earn consistent wages, while independent contractors are paid a set amount to complete a task.
Employees receive benefits, such as sick pay and vacation time, and are covered by unemployment insurance. Independent contractors have no benefits, which may make this status desirable to employers. However, independent contractors can benefit from multiple jobs they choose from various employers, and they generally work under less oversight than an employee.
Georgia figures workers’ compensation, the system for compensating employees injured on the job, according to employment status. Independent contractors are generally not eligible. The federal government also calculates social security payments at retirement based on how much an employee paid in. Employers do not withhold those payments from independent contractors.
Employers who misclassify employees as independent contractors to avoid contributing to social security or worker’s compensation insurance payments can be fined for their actions. An attorney well-versed in Johns Creek employment laws could help ensure that employees are classified correctly.
The Fair Labor Standards Act (FLSA) offers guidance from the federal Department of Labor (DOL) for determining who is an employee and who is an independent contractor. In 29 CFR Parts 780, 788, and 795, the government issues two questions that employers can answer to clarify who is an employee. The test asks how much control an employer has over a worker’s tasks and how likely the worker is to profit from the relationship because of the worker’s initiative. Further questions include:
The FLSA focuses on how much control an employer has over workers. If an employer controls their workers’ behavior, directing them on how to do their jobs, the workers are probably employees. Workers who set their hours of engagement and determine how to proceed with a project are probably independent contractors.
Employees are paid a consistent salary or hourly wage to complete any task assigned by an employer. On the other hand, independent contractors are paid a set amount for the project. This may include a retainer and balance after the project is completed.
Written independent contractor’s agreements are usually used to specify that the worker is not an employee. Business owners unsure of the status of their workers should consult a Johns Creek lawyer about employee misclassification.
Employers benefit from the talents of employees and independent contractors and often employ both in their business. However, it is crucial to clearly delineate the statuses of these two types of workers. At Sparks Law, our Johns Creek employee misclassification lawyers are here to clarify the rules and support you in your labor needs. Call today for a consultation.