Good news… your business or organization has more work than you can handle on your own!  Now it’s time to hire some help.  But before you dive in, there are important issues to consider in terms of the laws that will apply to employees vs independent contractors.

Why does it matter if workers are classified as employees vs independent contractors?

Simply put, unlike independent contractors, federal and state employment laws tightly regulate what you must do for employees.  If you hire an employee, you must, for example:

• Comply with wage and hour laws for minimum wage, overtime, breaks, etc.

• Withhold federal and state taxes

• Confirm employee eligibility to work in the United States

• Report newly hired employees

• Obtain worker’s compensation insurance

• Post required employee notices

• File quarterly taxes

Often times, new businesses and organizations simply don’t have the capital to comply with all of these laws or are not ready to set up the infrastructure necessary to comply with employment laws.  A common solution is to hire an independent contractor instead of an employee. (See IRS Publication 15-A for a further discussion and industry-specific examples of the distinction between independent contractors and employees.)

Stay tuned for our next blog post for Part Two and to find out how to determine if workers are employees vs independent contractors.

This article was contributed by our friends at Elevate Law and Strategy. Contact them to discuss these factors to help you decide if an employee or independent contract is best for your needs.