Now that the hangover has worn off and the calories have not, it’s time for 2019 New Years’ Resolutions. I know you didn’t ask for help, but you also didn’t not ask.
Here are some suggestions for those of you whose companies rely on independent contractors:
- Do you have one of those doorbells you can answer from anywhere? So do I. That’s because we’re cautious (syn., paranoid). Be similarly cautious that your non-legal, non-HR co-workers in management might retain independent contractors without your knowledge. Unleash your inner Anita Ward and make them Ring Your Bell. Set up a gatekeeper system that requires everyone to go through you before they can retain a non-employee worker. But don’t aim little cameras at their desks or you will lose friends.
- Update your Independent Contractor Agreements, even if you haven’t been sued yet. I am reminded of the time Bart Simpson exclaimed, “This is the worst day of my life!” and the wise yogi, Homer, responded helpfully, “–the worst day of your life so far.” (Here’s the clip.) Be prepared for if/when you are sued. Use the contract to highlight the facts that support independent contractor status. Be prepared.
- Don’t walk slowly in airports. This is (arguably) not directly related to the use of independent contractors, but it is important nonetheless because it drives everyone bonkers when people do it.
- Include arbitration clauses with class action waivers. In an alternative universe, your company has been sued by all of your independent contractors in a class action. In your reality, the contractor’s requirement to go at it alone in arbitration convinces your contractor that it’s not worth the effort to sue you, making you — who inserted the arbitration clause — the hero!
- Try this exercise: Do a simple self-audit. Check your company’s list of 1099 recipients for 2018 and see how many are individuals with SSNs, rather than entities with EINs. A long list with the names of a lot of individuals may be a sign that there are some independent contractor issues. That little exercise won’t burn off a single cookie, but it’s nonetheless a simple way to try to get a sense of how many independent contractors your business may have. The number is often greater than people realize.
Wishing you all a happy and healthy 2019!
For more information on joint employment, gig economy issues, and other labor and employment developments to watch in 2019, join me in Orlando on Jan. 24, Philadelphia on Feb. 26, or Chicago on Mar. 21 for the 2019 BakerHostetler Master Class on Labor Relations and Employment Law: Meeting Today’s Challenges. Advance registration is required. Please email me if you plan to attend, firstname.lastname@example.org. If you list my name in your RSVP, I will have your registration fee waived.
© 2019 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.
Screenshot from telegraph.co.uk
Ten European tourists face up to a year in Cambodian prison after being arrested for “pornographic dancing,” according to The Telegraph. Apparently, they went to a villa barbeque party and took pictures of themselves, clothed, dancing in suggestive poses.
Readers take notice: When barbequeing in Cambodia, do not draw unneeded attention to yourself by simulating sex positions and posting the pictures on social media.
When dealing with independent contractors, it’s also a good idea not to Continue reading
Image from The Jet Set
My favorite news story from last week was United Airlines’ decision not to allow a woman to fly with her emotional support peacock. Peacocks are pretty, strutting their feathery stuff to attract the smokin’ hot peafowl ladies, but they’re not cuddly, and they don’t belong in the tight quarters of commercial aircraft.
I did my research here, and I can confirm they’re not even good house pets. According to an Information Leaflet published by the Wrexham County (U.K.) Borough Council, peafowl have not taken well to modern methods of human transport. The Leaflet warns potential peafowl pet owners, “Peafowl for some reason are fond of cars and enjoy standing on them. They will also attack their reflection in cars and cause damage by scratching and pecking them.” They also have a “very loud high-pitched meow like call.”
None of this sounds like what I want in a seatmate on a commuter flight out of Newark.
Anyway, the point here is that looking pretty isn’t enough. Continue reading
The Republicans just threw a bone to independent contractors with their new tax law. What does that mean for businesses? Let’s examine.
Strategy question for businesses: Now that tax law provides more favorable tax treatment to independent contractors (see more here), should business reclassify workers as contractors for 2018?
If that’s your reason, then no.
Suppose a new law required ice cream shops to give free cones to dalmation owners. This would be a stupid law, but stay with me.
If I paint dots on a yellow lab, do I get free ice cream?
No, of course not. Even I call my yellow lab a dalmation, it’s still a lab.
“We don’t need no education / We don’t need no thought control,” are the opening lines to Pink Floyd’s Another Brick in the Wall (Part II). “Teachers, leave them kids alone!”
The same advice can be given when retaining independent contractors. Contractors are supposed to be in business for themselves. They are expected to be competent in performing the types of activities they are being retained to perform. In several of the Independent Contractor vs. Employee tests applied to federal and state laws, the amount and type of training is a factor that can tilt the scales toward a finding of misclassification.
But sometimes, some training is needed. The key questions to ask yourself are, What type? And How much?
You know deep down you’re not really going to run a triathlon or learn Mandarin in 2018, so how about a New Year’s Resolution that’s more realistic? Here are 5 things businesses can do to limit their risks of an independent contractor misclassification finding:
- Review and edit contracts. Independent Contractor Agreements should be customized for the specific retention, highlighting actual facts that would be helpful in opposing a challenge to independent contractor status.
- Review and modify facts. Almost every independent contractor relationship can be strengthened by finding ways you can give up control or memorialize ways that you do not ever intent to exercise control. Does it really matter what times of the day your contractor works? If you set hours and don’t need to, change that fact. Then memorialize it in the contract.
- Use a Vendor Qualification Questionnaire. Qualify your contractors before retaining them. Make them represent to you that they are really in business for themselves, have other clients, are not economically dependent on getting work from you, etc. These representations can be useful if the contractor — or the government — ever challenges the contractor’s classification by claiming the relationship is really employment.
- Assign a gatekeeper. You may have contractors that you don’t even know about because managers in parts of the business have retained outside help rather than ask permission to hire new employees. Create a process that requires managers to obtain permission from a particular person before retaining any outside labor.
- Be proactive. Examine the facts and circumstances of your independent contractor relationships now. Know where you stand on the risk scale. Then assess how you can make changes to better protect your business against a claim of independent contractor misclassification. There are almost always steps that can be taken proactively to limit your risks. Be ready.
“I want my money!” — Pearl, in The Landlord.
If you haven’t seen this Will Ferrell short video from 1997, take a look. Pretty funny.
Everyone wants their money. Method of payment is one of many factors used to evaluate whether an independent contractor is properly classified or instead is an employee.
Payment by the hour is permitted, but this method of payment more closely resembles employment. Payment by the project, regardless of time spent working, is most appropriate for an independent contractor relationship.