At some point, most small business owners will need to hire someone to help out. You might take on a full- or part-time employee, an independent contractor, a supplier, a sales agent or even an attorney. These are all situations of employment but all require different considerations.
An employee is someone who works for you and an independent contractor is someone who hires himself out to you. Sound simple? It’s not! There is a gray area between who an employee and a contractor actually are. It is more than just how you pay them. Just because you pay a worker with a 1099 doesn’t mean she is truly an independent contractor. A court just might consider her an employee. And your obligations to her are different!
Here’s a video on the differences!
Further, depending on the decisions you made when setting up your business entity, YOU might be considered an employee!
With an employee, you will need to pay into unemployment insurance and workers compensation funds, and possibly provide workplace safety assurances and comply with other regulations. But more importantly, you could be found liable for the actions of the employee! There is an area of law called Agency. This, simply, creates a responsibility on the part of an employer for the actions–and damages–of the employee. If someone working for you gets injured or causes an injury to someone or something else, the injured person will try and claim you as the employer to pass on the liability onto you. You need to make sure you know what you’re doing and have the proper protections in place.
Courts have established a long list of criteria when determining who is and who isn’t an employee. All clients of Breglio Law Office receive an informational packet describing these criteria and how to deal with issues like unemployment insurance and workers compensation. We also provide contracts that can help clearly establish the relationship with those you hire.
THIS INFORMATION IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL ADVICE. PLEASE CONSULT AN ATTORNEY BEFORE FORMING ANY EMPLOYMENT AGREEMENTS.