HR Basics, Legal Issues

Employment Law Basics: Properly Handling Independent Contractors

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Employment laws can be confusing and downright scary.

They don’t have to be. As a public service, from now until my special Halloween webinar Answers to the World’s Scariest Employment Law Questions, I’ll be tackling each major law one by one to give you what you REALLY need to know. By the end, you’ll have handy one-page cheat sheets for each and every law and your terror level will be reduced to zero.

Today’s Topic: Independent Contractors.

Here is basically everything you need to know about the Independent Contractors in one handy post.

INDEPENDENT CONTRACTORS CHEAT SHEET

This list is a guide to help you determine whether an individual is an independent contractor. Generally, the more “yes” answers you have to the questions below, the more likely it is that the individual is an independent contractor. Please consult with your legal counsel before making any final decisions.

Is the individual being hired to do work for a discrete project that is limited in time (as opposed to work that is ongoing and integral to the company’s normal business functions?

___Yes ___No

Does the work involve special skills and training not currently possessed by company employees?

___Yes ___No

Does the work involve skills and training which the individual already possesses (as opposed to skills for which the individual will need to receive training from the company)?

___Yes ___No

Does the individual pay for his or her own business expenses?

___Yes ___No

Does the individual pay for his or her own travel?

___Yes ___No

Is the individual responsible for his or her own federal and state tax obligations (i.e., the company is not paying payroll taxes for the individual)?

___Yes ___No

Is the individual being paid a set price per project or on a straight commission basis (as opposed to on a set schedule in the form of a salary, regular wage, or piece-rate)?

___Yes ___No

Does the individual provide the company with invoices for fees (as opposed to time sheets)?

___Yes ___No

Does the individual offer his or her services to entitles other than the company or to the general public at the same time he or she is performing services for the company?

___Yes ___No

Is the individual free to accept projects from other entitles at the same time he or she is performing services for the company?

___Yes ___No

Does the individual have a distinct occupation?

___Yes ___No

Is the individual self-employed?

___Yes ___No

Will the individual be performing services for the company as part of his or her own independently-established business?

___Yes ___No

Will the manner and means for achieving the specified result be left to the individual’s discretion?

___Yes ___No

Will the individual’s hours, places and order and sequencing of the work be left to the individual’s discretion?

___Yes ___No

Is the individual free of extensive supervision, especially in regards to the means and manner of performance?

___Yes ___No

Is the work going to be performed at a location separate from the company premises?

___Yes ___No

Does the individual have a significant investment in the facilities or equipment which will be used in performing the work? That is, is the individual responsible for providing the necessary tools, equipment and material for the performance of the work?

___Yes ___No

Is the individual permitted to select, direct and pay anyone who will assist in achieving the desired results?

___Yes ___No

Is dismissal of the individual premised on some type of failure to comply with an agreement, such as a failure to perform work (as opposed to the individual being subject to “dismissal at any time for any reason”)?

___Yes ___No

Is there an understood consequence to the individual for quitting prior to the completion of the project?

___Yes ___No

Is the individual free to reject additional projects from the company?

___Yes ___No

Stay tuned for more. Tomorrow we’ll de-scare-ify the National Labor Relations Act (NLRA).

This was originally published on Manpower Group’s Employment Blawg.

Mark Toth has served as Manpower Group North America's Chief Legal Officer since 2000. He also serves on the company’s Global Leadership Team, Global Legal Lead Team and North American Lead Team. Mark is recognized as an expert on legal issues affecting the U.S. workplace and is frequently quoted in media from The Wall Street Journal to 60 Minutes. He is also a past Chair of the American Staffing Association and is a certified Senior Professional in Human Resources. Contact him at mark.toth@manpowergroup.com.