How you define and distinguish employees from independent contractors, interns and volunteers has a dramatic impact on a worker’s rights and the company’s obligations to that worker. Priori is committed to helping you find the right employment lawyer to help you structure your worker relationships and avoid costly misclassification.
An employee is someone hired to provide services on a regular basis in exchange for compensation and is subject to the control of the employer in terms of working hours, location, and provision of tools to perform the job. Unlike an employee, an independent contractor is someone who contracts to provide specific services to a company according to contractual conditions but is not subject to the same level of control as an employee of that company. This lack of control can be evidenced by a number of factors, including operating under a business name, having his/her own employees, maintaining a separate business checking account, advertising his/her business's services, having his/her own tools and setting his/her own hours.
A business can expose itself to significant costs by misclassifying workers. Misclassification can result in the denial of benefits and protections to which employees are entitled. In addition, a business can be liable for federal and state government losses resulting from the lack of contribution to employee funds, such as Social Security, Medicare, state unemployment insurance and workers’ compensation funds.
In the “sharing economy,” worker classification has become a particularly hot button issue with lawsuits against prominent companies, like Uber, Lyft, Handy and Postmates.
Depending on the number and different kinds of workers in your company, the cost to receive a legal opinion on classification can range widely. Through the Priori network, employee classification packages can typically cost anywhere from $450-$5000. In order to get a better sense of cost for your particular situation, put in a request to schedule a complimentary consultation and receive a free price quote from one of our lawyers.
If a worker signs an independent contractor agreement, am I safe classifying them as such?
A written agreement outlining an independent contractor relationship is only one of many factors considered in determining whether a worker is properly classified as an independent contractor. Since an agreement between the worker and your company isn’t enough to ensure that an independent contractor relationship exists, it’s important to consult a lawyer on how to properly establish the relationship and to protect your business.
Can I legally hire an unpaid intern?
You should proceed with caution when hiring an unpaid intern. To legally hire an unpaid intern, the U.S. Department of Labor requires that the internship meet a six-factor test. Under the test the internship must provide educational training, be for the benefit of the intern, not displace regular workers and occur under the close supervision of existing staff, not provide the employer with any immediate advantage from the intern's work, not lead to expectations of future employment and must begin with a signed contract stating there is no expectation of compensation. In addition, some states, such as New York, have additional requirements that your company must meet before hiring an unpaid intern. If you are considering hiring an unpaid intern or implementing an intern program, then you should contact a lawyer to make sure the necessary state and federal requirements are met. You can read more about unpaid interns on Priori's blog.