Arizona Employment Attorney Discusses Employee Classification
Classifying your workers to avoid future liabilities:
The differences between an employee and an independent contractor can have a great impact on both the worker and employer. For example, an employer generally must withhold federal, state, and FICA taxes from an employee’s paycheck and pay an unemployment tax on the employee’s wages. Employees must be paid overtime and are subject to minimum wage calculations, while independent contractors are not. Furthermore, certain state and federal employee regulations apply to businesses only when they have a certain number of employees, and independent contractors are not included in the number.
For this reason, care should be taken, and an Arizona employment attorney consulted in ensuring that a worker is correctly classified as an employee or independent contractor. Employers who misclassify workers as independent contractors can be responsible for past employment taxes and may even have to pay penalties. It is also important for an employer to have a correct understanding of how many employees there are so that they knows which employment regulations are applicable.
It can sometimes be difficult to determine the classification of an employee. The general rule is that the more control the employer has over the worker, the greater the chance that the worker is an employee. Examples of questions that can be asked are:
• Does the worker supplies his or her own equipment, materials and tools?
• Does the worker control the hours of employment?
• Is the work is temporary or permanent?
• What is the degree of control over work and who exercises that control?
• Is the worker an integral part of the business?
Many employers assume that if a worker signs a contract saying that he or she is an independent contractor, then that settles the matter. It does not! The question of whether a worker is an employee or an independent contractor can only be answered after looking at the specific facts in each set of circumstances. The Arizona employment attorneys at Gunderson, Denton & Peterson, PC have experience in a wide variety of situations related to employees and independent contractors.