Naperville Business Lawyer Addresses Concerns Regarding Independent Contractors

independent contractor, employment law, Naperville Business Law AttorneyWhen you own a small- or medium-sized business, one of your most important considerations is how you will structure your team to meet the needs of your customers. For many companies, this means hiring a number of full-time and part-time employees as permanent members of your labor force. In some situations, however, independent contractors may offer a more advantageous solution to a business owner’s needs. The issue of employees versus independent contractors is one that comes up quite frequently in my practice, and I always strive to ensure my clients clearly understand the potential implications of hiring contractors.

Understand Your Company’s Needs

Before you go looking for independent contractors or employees, you must first develop a comprehensive picture of your business’s labor needs. You must consider your available resources, your workload, and your expectations for growth. Hiring and training of employees requires an investment in each one, and you need to be certain that your company can absorb the necessary costs. However, once trained, permanent employees provide you with the ability to increase productivity and accept new contracts without wondering where you will find the necessary manpower.

Independent contractors, on the other hand, can certainly help your company when the operations tempo is at lower levels. Contractors can be retained for individual projects with a specific contract related to each. You may also look to independent contractors for tasks and responsibilities not directly related to your company’s business goals, such as maintenance, information technology needs, or confidential document destruction services.

Proceed Carefully with Independent Contractors

While you may clearly state or even put in writing that the relationship between your company and the contractor does not represent employment, the Internal Revenue Service may find otherwise, based upon the substance of your business relationship. It is your responsibility as a business owner to ensure that you remain in compliance with the laws regarding independent contractors and employees, as the penalties for misclassification can be very expensive.

As you look for and develop relationships with independent contractors, there are few useful things to keep in mind in the interest of protection:

  • Find contractors who have advertised their services, and avoid words like salary and wages in the negotiation process;
  • Understand that an independent contractor should be free to set his or her work schedule. You may agree upon deadlines, but exactly how and when (within reason) the work is completed is generally up to the contractor;
  • Independent contractors typically supply their own tools. If you are providing a majority of the resources, an employment arrangement could be assumed;
  • Pay a contractor per job or project and not hourly or weekly, whenever possible. Additionally, try to make payments to a company, as well, rather than an individual. Reimbursement for food, travel, gas, and other expenses should not be paid separately; instead they should be part of the negotiated fee; and
  • Develop a clear agreement in writing, not only stating that the arrangement does not imply employment, but clarifying the terms that make such a statement valid.

If you would like more information about independent contractors and how they may be able to help your company, contact an experienced Naperville business law attorney today. At the Gierach Law Firm, we are equipped to help you understand the laws related to employment and contracting. In addition, we can help you draft contractor agreements that protect your business as you look toward future growth. Call our office at (630) 756-1160 today to schedule an appointment.