US Department of Labor “Takes on Small Biz” in Hospitality|
The DOL has increased their budget and the number of compliance officers to target small businesses who have individuals classified as contractors v. employees. It seems great to not pay the taxes and the benefits and all of the headaches of having employees but it is a risk because it is illegal. Here is a checklist to see if you are compliant:
- Profit or loss. Can the worker make a profit or suffer a loss as a result of the work, aside from the money earned from the project? (This should involve real economic risk-not just the risk of not getting paid.)
- Investment. Does the worker have an investment in the equipment and facilities used to do the work? (The greater the investment, the more likely independent contractor status.)
- Works for more than one firm. Does the person work for more than one company at a time? (This tends to indicate independent contractor status, but isn’t conclusive since employees can also work for more than one employer.)
- Services offered to the general public. Does the worker offer services to the general public?
- Instructions. Do you have the right to give the worker instructions about when, where, and how to work? (This shows control over the worker.)
- Training. Do you train the worker to do the job in a particular way? (Independent contractors are already trained.)
- Integration. Are the worker’s services so important to your business that they have become a necessary part of the business? (This may show that the worker is subject to your control.)
- Services rendered personally. Must the worker provide the services personally, as opposed to delegating tasks to someone else? (This indicates that you are interested in the methods employed, and not just the results.)
- Hiring assistants. Do you hire, supervise, and pay the worker’s assistants? (Independent contractors hire and pay their own staff.)
- Continuing relationship. Is there an ongoing relationship between the worker and yourself? (A relationship can be considered ongoing if services are performed frequently, but irregularly.)
- Work hours. Do you set the worker’s hours? (Independent contractors are masters of their own time.)
- Full-time work. Must the worker spend all of his or her time on your job? (Independent contractors choose when and where they will work.)
- Work done on premises. Must the individual work on your premises, or do you control the route or location where the work must be performed? (Answering no doesn’t by itself mean independent contractor status.)
- Sequence. Do you have the right to determine the order in which services are performed? (This shows control over the worker)
- You will want to mitigate the business risks to avoid fines.
Gary Wheeler, SPHR, GPHR, CCP, CBP
Gary is a business owner, HR Consultant and business coach. Gary is the founder and owner of The Virtual HR Director. The Virtual HR Director is a boutique HR consulting firm which works with large, medium and small organizations, helping them with their human capital solutions.Gary also serves as a senior consultant and facilitator for PRISM International, Inc. PRISM International is a leading provider in delivering diversity, compliance and cultural solutions for Fortune 500 companies.
He is also a board member for The Global Diversity and Inclusion Foundation and is the Chair Person for The Global Diversity and Inclusion Certification Institute.Prior to becoming a business owner in 2004, Gary spent 24-years at United Parcel Service (UPS) working in various assignments that include strategic planning, operations, Industrial Engineering and Human Resources. Gary received a B.S in Human Resources and an MBA from the University of Maryland University College (UMUC). He also holds a Master’s Certificate in Project Management from George Washington University and holds several HR certifications http://www.linkedin.com/in/thevirtualhrdirector http://www.linkedin.com/company/the-virtual-hr-director