Avoid Employee Misclassification

Contractor vs employee risks and rewards infographic

Employee misclassification can have a serious financial impact upon the employer. A few weeks ago, Rory C. Trotter posted an interesting info graphic on his blog: differences between independent contractor’s vs. employees (okay…maybe its only interesting if you’re an HR nerd). The information in the graphic itself was great but lacked substance in my opinion, so along with the info graphic, I also wanted to share three tips for HR and/or business owners to keep in mind when hiring IC’s.

1. Require a written and signed agreement between the company and the independent contractor.

The written agreement should include the type of work the worker is expected to perform, agree upon a set financial amount specific to the project for which the worker is hired, define a timeline for the work to be completed, and list the financial/tax obligations the independent contractor will be responsible for.

2. Conduct a job analysis of the work to be performed.

Reviewing the requirements of the work to be performed (i.e. skills needed, required supervision if any, location of work to be performed) will help clarify whether a work should be categorized as an employee or an independent contractor.

3. Conduct a periodic re-assessment of workers classified as independent contractors. 

To mitigate the risk of misclassification, ongoing periodic re-assessments of the factors surrounding an independent contractors work with an organization should be made. A re-assessment will help identify if any changes have occurred that merit a change in the workers relationship with the organization.

If you have any other best practices, be sure to share in the comments!

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