I recently started a new business that is based entirely online. I would like to hire multiple people across the United States, but I am unsure whether I hire them as independent contractors or as employees. My business model is that clients send me work that they need done, and I would then post the job on a work message board where my employees (or independent contractors) could view the project and then bid a certain amount to do the project. Each project may have special formatting guidelines that the client prefers, and all projects will have some sort of deadline (from 6 hours to 7 days). I have read that if I tell someone when and how to do their job, they are employees, but the employees would have sporadic work since the business doesn't have consistent work coming in yet, and they would not work solely for my business. They most likely would work for multiple businesses doing similar work, although they may not have their own official independent contractor business set up. I charge clients on a per-minute basis, and I would pay my employees or independent contractors on a per-minute basis as well. Do I hire employees or independent contractors?
It is very smart of you to ask now because businesses who do this incorrectly get hit with business-threatening litigation quite often.
The answer is that based on the very limited information you have provided it seems you may be able to characterize these workers as independent contractors, but there is way too little information to give you any kind of advice that you should reasonably rely upon. Further, the law of the state where the worker is working will control, so you will likely have to vet your approach in each state where you will hire one of these workers.
This is the kind of issue where you need to do more than get an answer on an internet site. You need a consultation with an employment law attorney who can learn all the aspects of the relationships you intend to create and give you the right kind of documentation necessary to protect your interests. Anything less than that risks your business down the line.
Good luck to you.
This answer should not be construed to create any attorney-client relationship. Such a relationship can be formed only through the mutual execution of an attorney-client agreement. The answer given is based on the extremely limited facts provided and the proper course of action might change significantly with the introduction of other facts. All who read this answer should not rely on the answer to govern their conduct. Please seek the advice of competent counsel after disclosing all facts to that attorney. This answer is intended for California residents only. The answering party is only licensed to practice in the State of California.
You may be able to classify these workers as independent contractors, but a full consultation would be necessary to properly advise you.
From what you describe, you may hire them as independent contractors. However, you should consult with an employment attorney because there is a multi-factored analysis and a mistake can be very costly. Good luck.
Disclaimer: This reply is not intended to be and does not constitute legal advice or the establishment of an attorney-client relationship. I always recommend consulting with an attorney, especially since many attorneys offer free, no-obligation consultations.
The answer to the question of whether someone is an employee or independent contractor varies by state as well as by administrative agency, e.g. workers compensation, labor code, IRS, unemployment benefit claim, etc. Each uses a multiple point set of factual questions to make the determination. To answer this properly one would need to know more about your operation and budget to deal with the situation.
I agree with Neal - it is in your best interest to consult with an attorney to analyze all the facts of the intended relationship with the workers.
As a general rule, an independent contractor relationship exists when the principal has no control over the work details (the manner and means of accomplishing the desired result). The problem is that, even if the principal does not actually exercises control over the work details, an employer-employee relationship will be found if the principal has the right to control work details. The California Supreme Court has ruled that "... what matters is not how much control the hirer retains, but how much control the hirer retains the right to control."
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