As a business owner, there’s a lot of legalities that you have to contend with if you hope to protect your interests. Amongst them is worker classification. Why does worker classification matter? Simply put, improper classification can lead to litigation that leaves you on the hook for an extensive amount of backpay and taxes. Here’s why.
Employee vs. independent contractor
Independent contractors are considered self-employed. As a result, they must pay their own taxes. Employees, on the other hand, have a significant portion of their taxes paid by their employer and they receive certain benefits. This is why many employers are tempted to hire independent contractors. But if you misclassify an employee as an independent contractor and are subsequently sued, then you could end up being liable for all of those taxes that you didn’t pay.
How classification is assessed
When a worker classification issue arises, a court is going to consider a number of factors to determine if a worker is an independent contractor or an employee. Here are some of those factors:
- The amount of control that the employer retains over the worker’s product, including whether the employer asks the employee for revisions
- Any restrictions on when the worker is required to perform his or her duties
- The amount of instruction that is given to the worker when it comes to how to perform the job at hand
- The amount of training provided to the worker by the employer
- Any benefits that are provided to the worker by the employer
- The amount of equipment that is provided to the worker
Do you need legal assistance with your classification issue?
These are just some of the many factors that can be taken into account in these matters. And each of them can have a profound impact on your case. That’s why you may want to discuss your unique circumstances with an employment law attorney who knows the ins and outs of this area of the law if you hope to protect your interests as fully as possible.