Never Been Sued? Congratulations! Here’s Why You Should Re-Evaluate Your Use of Independent Contractors Now.

IMG_1072Have you ever heard someone say, “The definition of insanity is doing the same thing over and over and expecting a different result“? That’s just wrong. No, it’s insanely wrong. (Irony! Actual definition, click here).

  • If you flip a coin 5 times and it comes up heads each time, is it insane to think it might come up tails next time?
  • If you play golf in a lightning storm five times and never get hit, is it insane to think you might get a nice electrical jolt next time?
  • If you root for the Browns to win a football game and they never do, is it insane to think they never will? [Note to self: Delete that. Bad example. It is true that they might never win a game. Shameful admission: I am a Browns fan.]

My consistent advice to companies that use independent contractors is to be proactive. Review your policies, practices, and documents now — before you get sued or audited. Many take this advice. Those who do not generally give two reasons:

  1. We don’t want to spend the money now; and
  2. We’ve always done it this way and have never been sued.

Folks, that kind of thinking is: n. extreme foolishness; folly; senselessness; foolhardiness.

Here are a few quick facts:

  1. Every company that has been sued for independent contractor misclassification had never been sued before the first time it was sued.
  2. Every company that has been audited for independent contractor misclassification had never been audited before the first time it was audited.

It is not a defense to a lawsuit alleging independent contractor misclassification to say, “but we have always done it this way.”

Remember, the determination of Independent Contractor vs. Employee is made based on the facts of the relationship, not what the parties choose to call the relationship. We blogged on that topic over here.

There are two primary ways that companies can be proactive:

  • Adjust the facts of the relationship to tilt the scales more toward independent contractor status. This can almost always be done without negatively affecting the business reasons for using non-employee workers. There are lots of ways to do this, all customizable to your company’s needs. Here are a few tips to get you started.
  • Adjust contract language to get rid of useless boilerplate and instead emphasize the helpful facts of the relationship. Many independent contractor agreements rate somewhere between mediocre and meh.

Don’t be an ostrich with its head in the sand. (Do ostriches really bury their heads in the sand? Apparently not.) Spending a little money on legal advice now can save a lot of money later, by reducing exposure to misclassification claims. Being proactive is an investment in your company and a way to protect your assets.

To think that because you have not yet been sued or audited, you will never be sued or audited = n. extreme foolishness; folly; senselessness; foolhardiness.