Employee or Contractor? The Government Speaks!

Mon, Nov 16, 2015 at 12:20PM


The Risks of Improper Employee Classification
The Uber Problem
Employee or Contractor?
The Government Speaks!

For those of you living on mars, Uber has become kind of a big deal. It has also caught the attention of the Department of Labor as they have classified all their drivers as "contractors." This simple change in employee classification has saved the company millions of dollars in taxes & benefits.

The Uber mess has prompted the United States Department of Labor to publish its first-ever formal guidance last month. The material covers the circumstances under which a worker may be properly classified as an independent contractor.

The guidance starts and ends with two basic conclusions: that most workers are employees under applicable federal law, and that written agreements between employers and their workforce supposedly confirming proper classification as independent workers are not iron-clad. In fact, they have much less relevance to the analysis than what the actual relationship is between the parties.

The document also significantly limits the circumstances under which the classification is permissible: As an employer, you can dub personnel as independent workers only when the contracted services have no relationship to your business’ operations.

10 Questions Every Dental Practice Owner Should Ask About Independent Contractors

Every dental practice owner should ask the following to determine whether an independent contractor classification for a worker warrants another look:

  1. Is the person solely providing the contracted services to our business?
  2. Is the person paid on a salary or commission basis?
  3. Is the contract indefinite in duration, as opposed to a finite time for a specific project?
  4. Do we have an employee who is doing the same work as the person classified as an independent contractor?
  5. Is the person receiving both a W-2 and a 1099 from our company?
  6. Is the person negotiating and/or signing contracts on our companyís behalf?
  7. Is the person both participating and making decisions in meetings our company has regarding strategic planning and initiatives?
  8. Is the person supervising our companyís employees and/or giving them direction on what to do?
  9. Does the person have an e-mail account with our company domain, a business card with our company logo, voicemail at our companyís office, or company issued equipment greater than $100 in value?
  10. Do we make a set schedule on when the person is supposed to provide services on a daily basis?

You may find more than half of those questions were answered "yes". The more “yes" answers, the greater the gray area and the more likely you have an employee relationship.

Remember, saying you are an independent contractor, does not mean you are. Please, make sure you understand who is at risk and what you are potentially agreeing to as the business owner.

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