However, you can protect yourself more legally by providing them with guidance documents on corporate policies for HIPAA and Protected Health Information (PHI) governance. This way, if the contractor breaks the law or regulations, you can prove that they have all the information they needed about the policy, which can reduce your legal liability. Despite the fact that you can`t hire a contractor to read or use your training materials, you can still enjoy some benefits by providing them as orientation materials and suggesting entrepreneurs use them to familiarize themselves with your business and policies. An independent contractor is a person appointed by the university or organization to perform a specific function or task and who is free to perform that function or task entirely at his or her sole discretion in terms of means and methods. No tax shall be withheld or paid on the payment of compensation. (IRS Treasury Regulation 31.3401 (c) – 1 (b). The existence of an agreement or contract helps to support the position of the independent contractor. This document must be very specific about what needs to be provided and the degree or lack of control of the university or organization over the person. While there is no fixed number of “yes” answers that will cause a person to become an employee rather than an independent contractor, some IRS auditors will try to classify a person with a single yes to employee status. If you have more than a few “yes” answers, you should exercise extreme caution when applying for independent contractor status.
Common law employee is a technical term for what we know as employees. However, what makes a person an employee is based on the control that the payer has over the employee`s activities and finances. This lesson provides an overview of the three common law factors (or tests) used to determine the degree of control of the payer over the employee. 2. You can encourage better employee engagement with contractors – If an entrepreneur takes the time to understand your company`s policies – for example.B. the use of social media at work, your company culture, and the attitude they`re supposed to have when working with others – this increases the likelihood that your employees will engage with them. This lesson highlights the highly subjective nature of the employee classification process and introduces the four types of employee classification: statutory workers, statutory non-employees, common law employees, and independent contractors. The focus is then on the rules for employees with statutory and non-salaried employees. If you purchase our training course for employees and independent contractors, you own it! Our license agreement allows you to use this course over and over again to train your employees! In addition to the many resources included in the course, this training course includes: Our Independent Contractor vs. The employee course covers everything you and your employees need to know to properly classify employees, avoid reclassification, and minimize the cost of reclassification if and when it occurs. The Independent Entrepreneur vs. Employee course includes two hours of video divided into eight easy-to-navigate lessons.
In addition, reclassification to employee status may require the employee to be included in pension plans and other benefit programs. The pension plan could be subject to criminal sanctions or even forfeiture. The specific factors used by the IRS to determine whether a person is an employee or an independent contractor are listed below. This list is commonly referred to as the “20 Factors” test. The vast majority of investigations to determine the work status of Form SS-8 result in the reclassification of the employee as an employee. This lesson covers the requirements that reclassification imposes on the employee/employee and the payer/employee. It also deals with section 3509 relief, which can reduce the cost of reclassifying workers. In addition, many states are expanding the employer-employee definition as they seek to turn gig workers (like those who work for Uber) and independent sellers (like those who sell Tupperware) into employees.
Misclassification of employees can literally bankrupt a company. To protect yours, learn how to properly navigate the classification process between employees and independent contractors. An employee is a person who provides a service to the university or organization and who works under the direction and control of the university or organization or its employees. Direction and control may be implicit if the employer has the right to control both the results and the employee`s systems and practices. (IRS Treasury Regulation 31.3121(d) – 1(c)). As a general rule, remember that you are allowed to provide contractors with all the training materials you want, provided that you make it clear that these are only reference and guidance resources – and that they are not necessarily obliged to read them. The importance of properly classifying workers as employees or independent contractors has never been greater than it is today. Now it`s just companies that are trying to cut costs by hiring independent contractors. The Tax Cut and Jobs Act of 2017 created a 20% income deduction for business owners and incentivized employees to become independent contractors. Note: The “Yes” answers indicate employee status in accordance with IRS Decision 87-41 on Income, 1987-1 BC 296. As you may notice, it is not always easy to determine whether an employee is an employee or an independent contractor. The criteria for such a determination are subjective and open to interpretation.
This lesson covers three levels of risk depending on the type and class of the worker. 1. You might be able to avoid legal issues and liability – An example of this would be if you worked in a hospital or other healthcare company and hired a third-party provider to do IT work for you. Of course, the entrepreneur must already be familiar with HIPAA and other health information protection regulations. However, you should always provide your contractors with the materials they need for their work – and this may include training and other learning materials. Whether or not to use these materials simply depends on them. The IRS has a training manual for employees and independent contractors at its web address. This material may be used for training purposes, but should not be cited as an authority to establish or maintain a technical position. This lesson focuses on the significant relief in section 530, which prevents retroactive and forward-looking reclassification and allows businesses to continue to treat employees as non-employees, which is the same as before. However, it is likely that many entrepreneurs come and go due to the temporary nature of their employment.