Employee or independent contractor?

The issue of independent contractor vs. employee can be summed up to who pays the taxes and whether you, as an employee, are responsible for withholding them. To be able to tell whether someone you have hired is an independent contractor or an employee, you must ascertain certain factors regarding your relationship with the worker.

These factors are:

  1. Behavioral: does the company control or have final say in how the worker performs his job?
  2. Financial: Are the business expenses of the worker’s job reimbursed by the payer? (this includes payment mode, who provides tools/supplies and so on)
  3. Type of Relationship: Is there a written contract in place? Do you provide benefits to the worker (insurance, vacation plan, 401K, etc.) Does this relationship end when the performed work is completed?

When you’re looking at these factor, don’t forget the nature of the job and how the job fits in with the rest of the industry. This guide will help you determine the role of a worker. As a rule of thumb, the more control you have over a worker, the more likely that he is your employee.

Ask yourself these questions:

  • Do you establish when and where the person works?
  • Does the worker use his equipment or yours?
  • Is the worker able to hire other people to finish the job without your approval?
  • Does the worker purchase his own supplies or services or do you?
  • Do you establish what specific tasks must be done by a specific worker?
  • How much guidance do you provide the worker for completing a task?
  • Do you pay him a flat fee or an hourly rate?
  • Do you provide benefits such as health insurance, vacations or paid time off?
  • Do you reimburse the worker for expenses that were incurred during the job?
  • Does the worker perform the same services for others?
  • Is there a written agreement with the person regarding the job that is to be done?
  • When the job is completed, does the person continue to work for you or is he free of any obligation?
  • Is the work performed an integral aspect of your business?

By answering the above questions you will be able to determine the level of control you have over a worker and thus establish if you’re hiring an employee or an independent contractor. Don’t forget though that you must look at your industry as whole to correctly determine these factors. For example, it’s more common for trade workers who are employees to use their own equipment than it is for office workers. You have to look at all the factors to ascertain whether you have to withhold taxes for a worker or not.

plumber independent contractor

Although there is a high degree of control over a plumber’s work, he is still an independent contractor

Other factors may indicate a high level of control even though the person you are hiring is an independent contractor. Take plumbers for example. If you’re remodeling your house and you hire one to install new fixtures, you will generally agree to have the work done at a certain place and at a certain time. You pay him an hourly rate and reimburse him for any expenses that occur. All these factors show a high degree of control but ultimately it is the worker who performs the job and thus controls the process. This is why he is an independent contractor and not an employee.

Consult IRS publication 15a or contact me if you’re unsure whether a worker you have hired is an independent contractor or an employee.

Facebook, the First Amendment and Your Employees

What is your firm’s stance on employees using Facebook, Myspace or maintaining a blog during or after work hours? You should have some kind of policy regarding this subject. No matter how comfortable or friendly you want your company’s workplace to be, some things should be strictly left at home or barred altogether. So what can you do about employees that are goofing off on FarmVille or have a sideblog that might turn out to be a liability in the future? There are some limits to what kind of discipline or limits you can enforce on your employees. In this article we will look at the issue and give you some practical tips that will keep employee productivity up while making sure that social networks and other media is kept to a minimum.

Private company? The First Amendment does not apply

Many people have the incorrect notion that the First Amendment of the U.S. Constitution, the right to free speech, grants them the ability to say whatever and wherever they want be it in a blog post or social network. This is wrong, however. Just like it is with the remaining Amendments, the federal Constitution protects people from the government, not from private companies. This is good for you because it means that you can enforce what is acceptable and what is punishable within your enterprise. As a private employer you have the right to ask of your employees not to blog or talk no social media about the company or the industry related to it. The First Amendment protects people (within reason) from getting disciplined by the government for things they might say – the same is not true when it comes to private employers.

Do bloggers have legal protection?

There are some laws that give employees some rights when it comes to blogging, however. The main issue is what the employees are writing about. Trade secrets, company data and information that is related to the company that would hinder a firm’s activity is grounds for firing. However, there are laws which prevent employers from retaliating against employees that speak up about certain issues and raising concerns about the work or ethics of the company. In such cases, you might have little control against prohibiting this type of whistleblowing. Some states also have laws that protect what employees do on their own time, so it’s best to consult an attorney that specializes in this issue.

The following laws may protect an employee that keeps a private blog:

Off-duty conduct laws. A number of states, including California, have passed laws that prohibit employers from disciplining or firing their employees for activities they pursue off-site, on their own personal time.

Although the original intent of this law was to protect smokers from discrimination, the wording of the legal text tends to include language that protects employees who use “legal products” while off duty and other states have laws that protect employee conduct (as long as it’s legal). You should consult these laws if you want to adopt a policy regarding blogging and using social networking sites at your company.

Protection for political views. Some states grant employees legal protection against discrimination for their political views. Disciplining an employee for a post that endorses a political cause or candidate could be illegal in these states.

Protection for whistleblowers. Whistlebloggers, a portmanteau of whistle blower and blogger, are protected if they raise concerns about safety hazards or illegal activity at work. Whistleblower laws recognize that few employees will come forward with issues that endanger the public if they can be fired for it – thus these laws protect them to a certain degree from disciplinary action or firing.

Prohibition on employer retaliation. Employment laws may protect employees from retaliation if they raise complaints that their rights have been violated. If an employee writes a post about workplace discrimination, sexual harassment, wage or hour violations, violation of the Family and Medical Leave Act or other illegal activity, they might be immune from disciplinary action.

Group activity protections. The National Labor Relations Act and other states laws protect the employees’ rights to join together in a union or otherwise and communicate with each other about the terms and conditions of employment and bring forward concerns about similar issues to the employer. You might have a hard time stopping employees that write publicly about low wages, unfavorable work conditions or long work hours. The National Labor Relations Board is fairly keen to get involved in such claims, bringing unfair labor practices against employers who have fired or punished their workers for airing their complaints in a public format.

Would you risk losing your job over a mindless joke?

Would you risk losing your job over a careless comment on Facebook?

Employee guidelines

If you’re an employee and you’d rather avoid this kind of unpleasantness in the first place, here are a couple of tips that will keep you out of trouble if you’re going to be using social media or blogging. Remember that the company you’re working for has many competitors that would use all avenues to discredit and get ahead of your employer so it’s in your best interest to follow company rules – by protecting your employer, you’re protecting your own job.

Don’t criticize or harass your co-workers. Even if it’s an inside joke that everybody’s in on, your boss might not get it.

Take for example Heather Armstrong, the first person who was fired for blogging. She wrote posts that made fun of or were critical of company workers and management as well as how she spent her time at home when she was supposed to be working. You can imagine that it wasn’t long before she was fired.

Don’t post anything that could be construed as discrimination. Racist, bigoted or sexist comments may seem funny when you write them but they may get your employer in a heap of trouble. In some cases, companies had to get rid of employees because of public pressure. Even if you think it’s just your opinion, when it comes to the workplace, nothing is too little to not be noticed.

Take for example former Mozilla CEO, Brendan Eich, who had to step down because he made a public donation supporting the gay marriage ban. An unfortunate event, but you can never be too careful when it comes to these things.

Don’t ever talk about your company’s trade, secrets or other confidential information that they would rather not make public. It was Michael Hansom, a temporary Microsoft employee that was fired after he posted photos of Mac computers arriving at Microsoft with the snarky tagline: “Even Microsoft wants G5s.” Another example is “Troutgirl,” a Friendster engineer who was fired after she wrote a post on her blog about the company’s site architecture overhaul.

Solve workplace problems through the usual channels first instead of going direct to blogging. You might have some legal protection if the information you’re posting falls under whistleblowing laws or if you’re writing about unsafe work conditions for example, but do you really want to go through the hassle of losing your job and then having to fight for it in court?

Take the story of Michael De Kort, a whistleblower who exposed Lockheed Martin in a video he posted to Youtube. De Kort leaked possible design flaws that the company had committed in refurbishing a number of patrol boats for the Coastal Guard. Sure, De Kort received an award for ethics and the government sided with him in the case, but that did not help him keep the job.

Use an anonymous blog or restrict who has access to it. The Electronic Frontier Foundation suggests employees open anonymous blogs in order to avoid persecution. If you’re going to blog, don’t reveal any personal details about you or your job, restrict who can view your blog (password-protect) or use a robots.txt file to exclude search engines from indexing your blog.