Who are those people you pay? Independent contractors or employees?

You pay folks for doing work for you, but how? Are they really independent contractors? Does it matter? YES! Mischaracterizing your employees as independent contractors may cost you huge amounts of back pay and insurance if you are wrong. Under the Affordable Care Act, your company may be one that is paying for employees’ health insurance. For those individuals you mischaracterize as independent contractors, you may be required to reimburse for all medical expenses during the time the individual was not covered by your business. So, be cautious.

Be sure that independent contractors are truly that. There are many factors to be considered, including: degree of control exercised by the company; location of workplace; independence in performing project; payment of expenses (who responsible); control of the order of work; who sets the hours of work; is the relationship continuous or of a consulting nature; method of payment; hiring, supervising, and paying of assistants; instructions; and training.

This list is not exhaustive or complete; instead these issues of some of those considered by the IRS and other taxing entities in determining the appropriate classification of a worker. Feel free to contact us for a consultation and legal advice on your situation.