Employment Law - Lapekas HR Consulting

There’s a bit of confusion surrounding the differences between using “Independent Contractors” and W-2 Employees. Businesses cannot afford to make a mistake in this area by misclassifying a person as an Independent Contractor, when the person is actually performing the work as a W-2 Employee.

The biggest problem with misclassifying employment status is how employment taxes are paid and who pays them. Obviously, direct employees (“W-2’s”) are individuals who are paid directly by the employer; and while taxes are withheld from the employee’s paycheck, the employer also pays social security tax, Medicare tax, federal and state payroll taxes. Independent Contractors pay all their own employment-related taxes – as they are their own business.

Let’s use an example of hiring an electrician to rewire your home or business.

There are a few quick questions to help evaluate if the person is truly an independent contractor or if they are an employee:

Does the worker offer services to more than just your firm?

· The electrician is not an employee of yours – they are their own company providing a service to you (as well as to many other home owners).

Do you have to train the worker to do the job in a particular way?

· You would not be responsible for training the electrician how to perform the work (the electrician would have their own expertise).

Do you set the worker’s hours?

· You may be able to ask the electrician to show up at a timeframe that will work for you, but you wouldn’t dictate to the electrician how long they would have to stay, or that they have to begin work exactly at 8am or they’ll be docked pay!

Must the worker spend all of his or her time on your job?

· You also wouldn’t be able to restrict the electrician from doing work for other home owners or businesses.

Do you provide the worker with the tools / equipment to do the work?

· You wouldn’t provide the electrician with the tools (ladders, ammeters, PPE) to be able to do the job – they would have all the required equipment with them on their truck.

There are more questions to help assess the relationship. However, if you answered “yes” to any of the ones listed here, then it’s important to really evaluate whether you’re working with an independent contractor or you should be paying this person as a W-2 employee.

Kathleen Lapekas

Best Practices, Employee Relations, Employment Law

Top 5 Reasons To Have A Employee Handbook

Top 5 reasons a business needs an Employee Handbook:

5. Employees appreciate knowing the rules, and how their employer will handle a given situation. I like to think of a handbook to being similar to the white-lines along the side of the road (they’re called guidelines for a good reason). They are there to help drivers know what the boundaries are. They keep everyone out of the “trouble zone.”

4. Employees don’t need to come to you with every question they have. Many of their questions can be answered just by checking in the handbook. This is particularly effective when managers encourage using the Employee Handbook like a tool.

3. Handbooks give employers protection when hiring, firing, and making any number of other employment decisions. Employers have a greater chance of winning unemployment claims and discrimination/wrongful discharge claims if they have a quality employee handbook. Quality, in this instance, requires policies that are written to reflect legal compliance.

2. Managers make better, more consistent decisions when clearly written, easily understood policies are readily available to reference.

1. An Employee Handbook gives your employees the sense their work environment is professional. They understand they work for a business that knows it is a BUSINESS; and isn’t being run as if it were a “hobby.”

A word of advice to business owners — NEVER, NEVER, NEVER use someone else’s handbook or download one from the internet. You are legally-binding your company to those policies. Even if you think you’ll revise the handbook later, you may not be familiar with all the potential legal issues that can arise from having policies in place that don’t pertain to your company. You need an employee handbook written to be legally compliant for your business.

For personal attention to personnel matters, call Kathleen Lapekas – SHRM-CP, PHR @ 812.457.1068.

Need help putting together a handbook that’s meaningful for your employees?

Kathleen Lapekas

Employment Law

“At-Will Employment”

Many people are confused about the term with “At-Will Employment.” Some employers I have met feel that “At-Will Employment” means they can hire / fire anyone they want for any reason under the sun, and they’re off the hook from being sued.

Technically, “At-Will” employment means that there is no “contractual obligation” on either the part of the employer or employee to retain employment. In short, both the employer and the employee retain the right to end employment with or without cause and with or without notice – so long as the company is not in violation of local, state or federal employment laws.

An “At-Will” employer can still be sued for discrimination, but cannot be sued for a “breach of contract” (since no contract is in place with an “At-Will Employment” relationship).

Need some assistance navigating “At-Will employment?”

Category Archives: Employment Law

The Work of Independent Contractors

Top 5 Reasons To Have A Employee Handbook

“At-Will Employment”