As some companies look to avoid certain administrative and financial headaches of employing workers, they make arrangements with individuals to be independent contractors who generally get paid without benefits and worker protections.
But be careful. The IRS and courts have certain working environment aspects that are used to evaluate the true definition of the worker.
This comes to light again as a federal judge ruled earlier this week that Rick’s Caberet, a strip club, has to pay its dancers minimum wage and treat them as employees. The club had long classified its dancers as independent contractors and were only paid in customer tips, thus skirting minimum wage rules. This week’s ruling means that 1,900 of Rick’s Caberet International current and former dancers can seek back wages, according to NBCNews.com.
There was a contrary ruling in 2010 when a U.S. district court judge ruled that FedEx drivers are independent contractors after some drivers claimed they were treated like employees and should be given full benefits, according to Bloomberg.com.
Just because there is a contract indicating a worker is an independent contractor, that is not sufficient enough. Be cognizant of the following considerations in the overall work environment:
As a business owner, here are some other hints to successfully protect your classification of the worker as an independent contractor