Business Reopenings: Hiring Employees or Independent Contractors?

From Andrew M. Ayers, P.C.. Andrew Ayers reminds businesses as they reopen and hiring workers, they need to be mindful of properly classifying workers as employees or independent contractors. Andrew writes:

Business reopenings are happening. While I am trying to be optimistic that we are on our way to more business reopenings this summer, some of the recent news isn’t so optimistic. Some business owners are keeping their fingers crossed. They’ve weathered the last four months and have found new ways to keep their business going. And some of them are even thriving in this crazy economic climate. Those businesses are growing and looking to hire more help. Some are hiring temporary help for the summer. But many of the businesses are looking at hiring for 2021 and beyond. The most common question is whether they should hire an employee or an independent contractor? They are two different classifications that each have different implications for your business.

What Is An Independent Contractor?

Independent contractors are not generally paid with a steady paycheck. They normally work their own hours and have control over their schedule. With the stay-at-home orders from this spring, they were able to work from home and take care of family obligations as well as the work that needed to get done. As long as they deliver the product or project they are hired for, they are doing their job. Often they can be temporary workers, only assigned to work on a short-term project. Instead of using your equipment, they usually use their own computers and other technology. When materials are needed, they provide it themselves (rather than from an employer).

An independent contractor is not necessarily exclusive to your company. They may be doing many projects at once for a variety of companies and could have a hand in a variety of business reopenings at once.

What Is An Employee?

If you have a person on your payroll, with a steady paycheck, that person is an employee. They normally perform work that is essential to your business. With a standard weekly schedule, they are working a full-time job exclusively for you. Unlike an independent contractor, an employee is “controlled” by the company. The company controls how the work is performed and how it is delivered.

For a company, this difference also means that they must pay taxes, including FICA and federal and state unemployment tax. There are also disability and worker’s compensation premiums to be paid to your state’s insurance fund.

Read the full story at Business Reopenings: Hiring Employees or Independent Contractors?

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.