Magazine article Workforce

Legitimizing an Independent Contractor Relationship

Magazine article Workforce

Legitimizing an Independent Contractor Relationship

Article excerpt

Telecommuting was once more an employee benefit than a company advantage, as the article "Employing the Best People-From Afar" in the March 1997 issue of WORKFORCE suggests. But now, telecommuting is turning into a staffing strategy known as distant staffing in which organizations are employing people from anywhere in the world. If you employ people from afar, you must make sure that both you, and your employee, understand the difference between an employee and an independent contractor (IC). Below are some suggestions by H. R. Options in classifying independent contractors.

Frequently there are mitigating factors which might argue in favor of a particular worker's independent status. To the extent these factors do exist, or to the extent that your personnel can support these factors through their actions in advance of an audit, your chances of successfully establishing any particular worker's independence will increase. Each of the suggestions we offer below will need to be reviewed against the existing circumstances and reviewed by counsel.

1) Provide the intended worker with written job specs for the work to be performed.

* Ensure the job specifications are free of references to your company being in control of the work.

2) Solicit a written bid for specified services from the worker, including the time frame, cost and deliverables.

3) Document all available indication of the worker's independence, including appropriate evidence of their holding themselves out to the general public.

4) Segregate the worker's file from all personnel files. Maintain the worker's record in a vendor file in the purchasing department as opposed to the personnel department or in accounts payable as opposed to payroll.

5) Negotiate the worker's fees in advance of the services being provided.

* Ideally, negotiate a flat fee based upon the contracted services.

* Avoid hourly compensation.

* Avoid reimbursing contractors for incidental, recurring business expenses including phone, parking, and so on.

* If expense reimbursement is necessary, (i.e. for unanticipated travel expenses) contractors should include expenses on an invoice, not the hiring firm's expense report.

6) Have the contractor complete a questionnaire which might, among other things, ask the worker to:

* List the tools the IC will use in the performance of his or her work. …

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