The Threats of Mistakenly Managing “Workforce” As Unbiased Contractors

Compact companies often want to take care of workers as unbiased contractors for any selection of explanations: keeping away from the bother of calculating and spending personnel withholdings escaping the employer’s demanded expenditures for unemployment insurance, workers’ payment, and other costs and, freedom from extra time and other wage and hour regulations. In brief, managing staff as “independent contractors” can exert a powerful attraction on a little company.

Like numerous other solid temptations, treating an worker as an impartial contractor can also lead immediately to hell if the employee is not one particular. The litany of hellish penalties, both for an employer and for its dependable officers and equity owners, is sobering.

To start with there are the unpaid withholdings for which not only the employer but also its accountable officers and directors could have joint and quite a few particular liability. Officers, administrators, users, managers, companions and restricted legal responsibility associates are also personally liable, jointly and severally, with their business entity and just about every other for all claims’ prices, civil penalties and lawyer service fees if it truly is identified that the ” independent contractor” was really an “personnel” when they ended up hurt although doing the job. ORS 656.735.

When a misclassified worker is wounded on the work, they are not only totally free to carry a personal damage motion towards their employer but the employer loses the gain of any protection primarily based on the employee’s individual contributory negligence. ORS 656.020.

Also, people today liable for compliance with an employer’s unemployment insurance coverage could be held personally liable, jointly and severally with every other and with their employer, for unemployment benefits and claim fees for an personnel misclassified as an impartial contractor. ORS 657.516.

Accordingly, whether to take care of any personal furnishing companies to a business as an impartial contractor is a conclusion which should be built with caution. A slip-up could not only destruction your enterprise but drain your personalized finances as well.

© 12/12/2013 Lawrence B. Hunt of Hunt & Associates, P.C. All legal rights reserved.