We have an office where the workers are considered as independent contractors, how can we let them go without saying YOU’RE FIRED. They are not doing anything but taking up space and for that we are unable to do a new hiring and try to bring people in that are actually willing to work and not just go on shift and hang out with people, it makes no sense for them to be around if they are being paid commission only. So any suggestion?
?? Why can't you say "you're fired"? The general rule is that any worker without a written employment contract is "at will" and can be fired without notice for any reason or no reason, as long as the firing's not discriminatory due to their age, race, gender, ancestry, religion or disability, or in retaliation for them being a union organizer or whistle-blower or exercising some other legal right.
If you're concerned about being sued for wrongful termination or discrimination, follow any written policies the company has for warnings and reviews, document everything, and fire the bad workers after documenting their poor work. Your best bet is to consult employment counsel before doing anything to maximize preventative efforts.
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What do you mean, the workers are "considered" independent contractors? Workers cannot be deemed independent contractors just because you want them to be, or even if they want to be. Whether or not a worker is an employee or an independent contractor is a matter of law. Take a look at the following information; if the workers are really employees, you may have some extensive wage and hour claims to look forward to, as well as actions by the IRS, FTC, EDD, SSA and more:
The general rule is that a person is an independent contractor if the employer has the right to control or direct the RESULTS of the work but not HOW the work is done or even WHAT work is done.
Many employers misclassify workers as independent contractors, when in fact they are employees. Employers receive a substantial benefit from doing this, but there is NO benefit to the workers. If you are wrongly classified as an independent contractor instead of an employee, you will not be eligible for many benefits of employment or your eligibility will be reduced. Areas affected include the right to:
– be paid for all hours worked or controlled by the employer;
– the legal minimum wage;
– overtime pay;
– rest and meal breaks;
– workers' compensation insurance;
– Social Security contributions;
– unemployment benefits;
– state disability benefits;
– employer benefits such as vacation, sick leave, pension, medical insurance, etc.
Also, in some states, including California, employers are subject to a penalty if they misclassify employees as independent contractors (see below).
There are different ways to determine if a worker is an employee or independent contractor. Employers must comply with all relevant laws.
FEDERAL TAX LAW: The Internal Revenue Service (IRS) looks at three areas to determine a worker’s status:
Behavioral Control This area considers instructions and training. If the employer has the right to direct or control your work, even if it does not exercise that right, you are an employee. Therefore, if your employer gives you detailed or extensive instructions on how to get the job done, you are probably an employee and not an independent contractor. These instructions might include when to do the work, or how and where to do it; what equipment or tools to use; who you can hire or not hire to help you; what supplies and services to buy, and/or where to buy them. If the employer trains you in required methods of doing the work or the procedures to get the work done, this is evidence the employer wants things done its way, which indicates you are an employee and not an independent contractor.
Financial Control This area considers who has the right to direct and control the business, not just the work. The more of a financial or promotional investment you have made in the work, the more likely you are an independent contractor. However, there is no requirement for an investment in order to meet the definition of independent contractor. If you incur expenses in performing the work but are not completely reimbursed, you are more likely to be an independent contractor rather than an employee, especially if these expenses are high. If you have the chance to make a profit or loss on the work, you are probably in business for yourself and therefore an independent contractor.
Relationship of the Parties If you do not receive benefits such as medical coverage, vacation, or pension, you may be an employee or an independent contractor. However, if you receive benefits, you are probably an employee.
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*** All legal actions have time limits, called statutes of limitation. If you miss the deadline for filing your claim, you will lose the opportunity to pursue your case. Please consult with an experienced employment attorney as soon as possible to better preserve your rights. *** Marilynn Mika Spencer provides information on Avvo as a service to the public, primarily when general information may be of assistance. Avvo is not an appropriate forum for an in-depth response or a detailed analysis. These comments are for information only and should not be considered legal advice. Legal advice must pertain to specific, detailed facts. No attorney-client relationship is created based on this information exchange. *** Marilynn Mika Spencer is licensed to practice law before all state and federal courts in California, and can appear before administrative agencies throughout the country. She is eligible to represent clients in other states on a pro hac vice basis. ***
As Attorney Spencer points out, your company may have some substantial liability for misclassifying employees as independent contractors, in which case your company could be held liable for a plethora of problems including wage and hour claims, unpaid overtime, and actions by the EDD, Social Security Administration, Internal Revenue Service, Franchise Tax Board, and Federal Trade Commission.
Effective January 1, 2012, California imposes dramatic penalties on employers found to have engaged in “willful misclassification” of workers as independent contractors, as well as on non-lawyer advisors who knowingly counsel to engage in such reclassification. SB 459 (which adds Sections 226.8 and 2753 to the California Labor Code) makes employers liable for civil penalties of $5,000 to $15,000 for each violation of “willful misclassification” of employees as independent contractors. In addition, if it is found that the employer has a pattern and practice of misclassifying independent contractors, the penalties can increase to a minimum of $10,000 to $25,000 per violation. The new law also imposes non-monetary penalties by requiring posting of a notice on the website or in a public area of the employer for one year if the employer is found to be in violation.
I strongly suggest that you consult with an employment attorney immediately before taking any action to "fire" these so-called independent contractors.
Frank W. Chen has been licensed to practice law in California since 1988. The information presented here is general in nature and is not intended, nor should be construed, as legal advice for a particular case. This posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, consult with your own attorney.
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