Employment Law You Decide-Karen

Questions:

1. Do you feel that Karen is an independent contractor or an employee? What is your rationale for this decision?

I do feel that Karen is an Independent Contractor. Karen came on to ABC Utility to develop training materials for an upcoming session on diversity. Cynthia was pleased with Karen's work and then asked her to do additional work. Karen is a self-regulating contractor as she has never been hired on to ABC Utility as a permanent employee. Karen was brought on as a human resources consultant. My reason for this decision is based on the fact that Karen has been working for the company for a period of five years and began her career with ABC as an independent contractor. Karen probably thought she qualified to be an employee and was only regarded by the fact that she was making 10,000 a month. When an employee makes ten plus a month this looks suspicious to the IRS. Karen lost the person that provided her health benefits and now realizes how important it is to her and wants the IRS to give a determination of her employment status.

2. What factors do you feel help contribute to Karen being an employee?

There are several factors that help contribute that Karen is an employee.

The summary states that before you knew it Karen started working for the company for five years. Typically an independent contractor does not work for that long period of time without being turned over to an employee. The IRS Test list 20 factors to help determine if someone is an employee, a continuing relationship is a factor to consider. When Karen started the position her title was Human Resource Temporary. Her title now is Human Resources Consultant. If Karen was still temporary there was no need in changing the name of her position to be more consistent with others in the department.

3. What factors favor her being a contractor?

There are a few factors that favor Karen being a contractor. Karen does receive a 1099 for her wages. This form is given to independent contractors by employers to report what they have paid the contractor. Karen also does have a contract with the utility company. Independent Contractors do have an agreement with the employer they are working for. The summary also states that Karen still had other limited clients over the years. It also states that she had one client for an approximately 40-hour project two years ago and one client keeps her on a retainer basis. This shows Karen was still working as an independent consultant.

4. What are some potential legal implications in the case? What should the utility do to rectify any wrongs in this situation?

Legal implications that can come against the employer if Karen is found