Misclassifying employees can be a simple mistake with serious risks when employing independent contractors or temporary workers. To keep costs down and staff your office during employees’ temporary absences, you may hire workers as contractors rather than full-time permanent staff. To comply with tax codes and other employment laws, it’s important to correctly label workers to avoid fines. Here are 3 ways to avoid misclassifying employees in your office.
- Determine How You Compensate the Worker
How you’ll be paying the employee factors into their classification. If they’ll be receiving a salary or an established hourly wage, they are generally part of the core team as an employee. However, it’s tricky to base the classification solely on if the worker has a regular wage, so be sure to consider other factors like putting personal capital or other investment into the project. An example of this is with independent contractors; many are expected to have their own equipment or work materials.
- Determine the Worker’s Relationship with the Company
Does the worker need to be in the office for a certain amount of time each week? The expectation of a consistent and established position makes them more likely to be a regular employee. Temporary jobs or ones where the worker is consulting off-site or freelancing are all positions that should be classified as such; the worker’s relationship and permanency at the company makes a difference.
- Seek Resources
Looking at the relationship between the worker and the company, including how they are paid, how much time they work and who is supplying the materials for the job are simple ways to avoid misclassifying employees. If you have any questions about how this applies in your company, contact us today.