Youdecide Assignment: Independent Contractor or Employee

Week 1 YouDecide Assignment: Independent Contractor or Employee?

For Professor Michelle K. Preiksaitis, JD, SPHR, SHRM-SCP

From Student: Aneela Iqbal Mody

Date: May 9, 2015

HRM593: Employment Law

Keller Graduate School of Management of DeVry University

Week 1 YouDecide Assignment: Independent Contractor or Employee?

“Introduction”

Karen is the consultant at ABC Utility. She had been paid a monthly salary of $10,000. When she was hired, she was not offered any benefits, but later on she asked for the benefits since her husband was passed away. Cynthia, her supervisor denied to provide Karen any benefits. Karen has contacted the IRS to determine her status.

“IC or Employee?”

Karen should be taken into consideration as regular employee of the company, because she is working for ABC Utility for last five years and she is also receiving a monthly salary. As a consultant, she was asked to develop the training material for the upcoming training session on Diversity. She was hired by her Manager since she liked her working style and she has a solid working relationship with her manager Cynthia. She has been paid regularly so she is most likely employee of the company. She has worked full time, which is 40 hours per week. The only drawback is that she was not receiving any benefits and there was no record of tax during the period.

“Factors of Classification”

The IRS has designed a record of 20 factors that can classify the workers as employees or independent contractors (Oregon.Gov & IRS, 2012). Following steps prove that Karen should be considered as regular employee.

Integration: 

According to the IRS list, integration is the foundation. A person, whose job is incorporated with company’s procedure is most likely employee.

Karen is regular employee of ABC utility. She was involved in many project and recently, she was developing the training material for an upcoming session. Karen’s manager Cynthia like her work so much that she was offering her additional projects. It proves when the success of company determine by the services provided by an employee. This succeeds to support employee category.

Service rendered personally: 

If the employee responsible for the jobs or task personally, this will indicate control by the company.

Cynthia, supervisor of Karen was offering her more projects, one after the other which shows that Karen has been reported to her manager, and they have a relationship of employment. Karen was performing her services for the company and manager was interested in the work provided to her. This also tends to support employee category.

Continuing relationship: 

If there is a continuous relationship between an employee and a company this will be indicated an employment relationship.

Karen was working in ABC Utility for five years and there was continuing relationship between Karen and Cynthia which shows the employment relationship does exists. Since it was a long term duration it will be considered as employee classification, but if it was short term duration then it was considered as independent contractor.

Set Hours of Work:

If the employee work according to the company’s set hours it is indicated as employment status.

Karen was working 40 hours a week. According to the 20 factors, if the employee works forty hours for the company then the company will indicate employment status whereas, if the company does not control the hours of an employee then it is indicated an independent contractor.

Full Time Required:

In full time, the company has control over the time of an employee. This also give provision of an employment relationship. On the other side if employee set his or her own hours it may consider as Independent Contractor.

Karen was a full time employee.

Payment by Hour, Week, or Month:

Hourly, weekly or monthly payments are mostly consider as employment relationship whereas, payment based on contract or completion of any project is indicated as independent contractor.

Karen was working on monthly salary and her salary was $10,000 per month.

Level of Instructions:

According to the list of 20 factors, if an employee is required to observe with the instructions about how the work should be executed is a regular employee.

Karen was accountable for her job responsibility and her manager Cynthia was given her instruction about how the task should be accomplished. In this case, she was employee of the company.

 “Misclassification: Employee vs. IC”

Karen was hired as an Independent contractor, but there wasn’t anything in writing or any signed contract. She had filled the form 1099, but not W2. Employer didn’t tell her that the requirement on which she based, are qualified as regular employee. She was earning $10,000 per month, but there was not enough document to support her that she was a contractor. She had a client for two years for forty (40) hours and recently she has another consumers on allowance basis. These projects were not even covered the 2/3 of her time record that’s why she was utilizing most of her time which was approximately 40 hours at ABC Utility. Regardless, Karen was retained as a consultant she had been working within a relationship with the employer for longer duration (Bennett, Alexander, Hartman, 2012).