The all-time best song lyric is Bob Seger’s “I wish I didn’t know now what I didn’t know then,” from Against the Wind. This is based on a comprehensive survey of 1 registered voter, but good enough.
Too many companies assume they don’t have an independent contractor misclassification problem because they have not yet been sued, audited, or investigated.
Remember how you could cover the eyes of small children and convince them you’ve disappeared? You didn’t disappear, though, did you? (Or, did you?!!) This is a fun little game but bad risk management strategy.
The better strategy is to review contracts and practices now, before the human waste hits the rotating air circulation device. Investing a few thousand dollars to proactively assess risk and make a few changes can save millions of dollars in potential liabilities.
Here are five clues your independent contractor may be misclassified:
1. An outsider would be unable to distinguish your contractors from your employees. For example, they sit side by side and perform the same tasks, dress the same, report to the same supervisor, or were seen sharing the last spork from the empty utensil dispenser in the cafeteria.
2. The contractor works only for your company. “I know it hurts to say goodbye, but it’s
time for me to fly,” advises REO Speedwagon. Spread your wings, contractor, and go find some other clients.
3. The contractor has been with your company longer than Mick Jagger’s current girlfriend has been alive. That’s a little extreme (29 years, but probably determinative if true). The normal human gestation period may be a better measuring stick, unless the contractor was retained for a single specific project.
4. The contractor uses your company’s stuff to do the work. Get your own stuff, contractor!
5. Your company directs the contractor when and where to do the work. Workin’ 9 to 5, what a way to make a livin’. Dolly was an employee, not an independent contractor.
As I often tell clients who say their contractors are happy being contractors, all contractors are happy being contractors — until they’re not. As Joe Walsh said, life’s been good to me so far. But once the relationship ends, that’s when they file for unemployment, call a plaintiff’s lawyer, file a DOL complaint, or if your contractor was Taylor Swift, write a song about the soured relationship. At that point, company counsel will long for the good old days. Time to cue up Against the Wind and appreciate the lyric.