Skip to content

Posts from the ‘Employment Law’ Category

Independent Contractor or Employee — How do you tell the difference?

I recently had a client ask me whether he could avoid all the hassle of payroll taxes, withholding, unemployment insurance, workers’ comp, minimum wage, overtime, etc. — just by issuing 1099’s to all his staff and treating them as independent contractors.  The short answer?  No.  I mean, think about it.  If it were that easy, everyone would be doing it.

And in fact, many employers are doing this.  But they are also taking on a lot of risk.  Because if the government finds out — let’s say, because you try to fire the “contractor” and he seeks unemployment benefits through EDD, or he decides he really wants some overtime and files a complaint with the Department of Labor — you can be liable for very large penalties, plus interest on all the payments owed.  As anyone who has been through an employee audit will tell you — It’s generally not worth the risk.

So, how do you know whether a worker can legitimately be classified as a contractor vs. an employee?   Read more