What business owners need to know about using contract employees

by | Dec 31, 2015 | Business Litigation |

Business owners in Cincinnati have certain rights and responsibilities when it comes to employing independent contractors or working with regular employees. It is important to understand the distinction between the two types of workers, as well as what employing them entails, to avoid a possible legal dispute.

According to the United States Small Business Administration, independent contractors typically set their own hours and use their own equipment. Often, they work from home or another place of their choosing, or travel to a variety of companies or households as part of their job. They are normally paid upon the completion of each job or task.

Workers most likely fall under the company employee category if they usually work exclusively at their employer’s site under hours and policies set by the boss, use the company’s supplies and get a regular paycheck based on work time or a set salary. If an employer wrongfully classifies employees as independent contractors when, in fact, they should have employee status, serious penalties can result. They may face government litigation concerning taxes, or an employee may file an employment rights lawsuit.

Many business owners find it beneficial to employ independent contractors because of the potential cost savings, according to Business News Daily. Employers are not required to pay overtime or minimum wage, withhold taxes or provide workers’ compensation or health insurance for contracted workers. They may also save money on not having to provide work equipment or office space. On the other hand, companies may have more security having regular employees who do not leave once the job is completed, as well as better control over enforcing company procedures.

There are financial and legal pros and cons with hiring either contracted or regular employees. Business owners will need to consider the different aspects of each and decide which option will best suit their company’s needs.

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