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Law and Business

 

Law and Business

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Law and Business

Date: November 20, 2017

Subject: Independent Contractor Vs. Employee

As our company grows, we are automatically required to expand our team to address our business needs and other factors. There are two primary options when sourcing for individuals to work for us: independent contractors (ICs) and employees. Fortunately for us, they are both expected to offer the same services or perform the same duties but with differences that depend on what we are looking for could either leave us vulnerable or protected.

Sally Stevenson is a very qualified candidate who by all standards would be a valuable addition to our team here at RollinSilver. Her resume is very impressive, and her references have given her perfect recommendation in marketing in both offline and online segments. Her social media experience is what the company needs to propel to the next level as well as adequately compete in the industry. However, I feel that we are a little at a loss, as we have only worked with full-time employees and venturing or even considering the possibility of hiring Sally as an independent contractor. There are several distinct differences between the relationships and obligations of entering into either kind of relationship with Sally or another worker.

The major difference between ICs and employees is the kind of financial control and relationship for both scenarios. The difference is mainly based on how an individual is paid were we to enter into a contract with him/her. When a worker is an employee, they are entitled to a wage per the state or federal laws and receive a salary at the end of an agreed period. Thus, an employee is paid an hourly or daily wage that complies with the state or federal laws of employment as well as the contract. Moreover, the salary received is netted after the necessary reductions like income tax, social security, and Medicare have been deducted. The regular wage paid to the employee is not subject to change, and the company is expected to pay whether it makes profits or losses. As an employer, we are required by the law to make FICA tax payments for all workers classified as employees on the company’s payroll. On the other hand, ICs are classified as independent and self-employed business owners required to pay their income and FICA taxes from the amounts a company pays them. Moreover, ICs are only given a flat rate amount, and they are expected to follow the contract whether they incur losses or profits.

An employee is controlled and supervised by the company, and any behavior by a worker is stipulated in the company policy and other compliance documents. An employee works under the direct instruction and supervision of the company. In most cases, the employee is trained by the company on the day-to-day activities of the company as well as what is expected of him or her. In the event, we decide to hire another employee, we would need to train and direct the work that he or she is expected to perform, what tools and equipment to use, and how the work is supposed to be performed. The direction required also include the specification of business or working hours and the precise tasks the employee is expected to perform either daily, weekly or monthly usually communicated in the form of a work schedule. An IC is a professional expert in their field and is brought in as a consultant who is well vast in the area he or she is being hired into. For instance, what makes Sally an excellent candidate for the marketing position is the fact that she has worked with other companies and will not require close supervision to complete the tasks within her job description. An IC has her own tools and equipment of work and can choose to subcontract the job given, create her own working hours as long as she is available when needed and the tasks she is paid to perform is satisfactorily completed. They control their method of work, and at times it could contradict the central operation of the business or open the company to different kinds of unorthodox practices.

Other differences that exist between the two is that an employee does not enjoy profits or incur losses the company does but an IC could if the contract agreement bases the amount paid on the gains, losses, and progress made by the company. A firm or the ICs can decide to terminate the contract at any time without necessarily providing a valid excuse as long as it is within the agreement signed at the beginning of the job. Employees, on the other hand, are bound by a contract that dictates the terms of termination and an employer cannot terminate an employee’s services without good cause, notice, and compensation. Moreover, an employee is more accessible to a company as he/she has clear guidelines of when they are expected to be at work and since they can only work for one company at a time. Conversely, the ICs can decide to either work from the company’s office, their office or home which makes them somewhat inaccessible.

In relation to the information mentioned above related to the kind of relationship, we would expect from either an employee or an IC as well as the current position and future projection for our company I would advise against hiring the latter. Our company is in a critical position where any missteps or inconsistencies would undermine the strides we have made towards the next developmental level. First and foremost, while ICs look attractive as it has its own equipment, it can make financial sense and even offer unequivocal expert service they tend to provide short-term solutions. RollinSilver needs a worker that will offer long-term services that will be tailored to grow with the company. Sally has expressed the fact that she understands that it is expected she can only work for our company which means Sally cannot take on more clients and as such she cannot exclusively and indefinitely offer her services to us alone. ICs sign and work on contract basis, and as such they increase inconsistencies in the profits and productivity of the company. For instance, Sally could propel the business to new levels as an independent contractor, but since she will be using her methods and equipment, the gains she makes may be reversed or stalled when she decides to suspend her contract. On the other hand, while it may cost us more money in the beginning to train a new employee, we can offer them a long-term contract which will offer consistency in the output in the long run. Additionally, when we decide to expand the social media marketing department we will not incur further costs as the employee already trained will oversee the training of new employees.

Furthermore, a developing company needs to create a team solely devoted to its success both in the short and long term. A company cannot own the copyright to any product designed by an independent contractor and with the future of marketing being social media and digital marketing, hiring an IC would conflict with the central goal, mission, and vision of our company as we delve into new heights. The nature of our work at RollinSilver is very delicate as well as requires supervision and oversight of all the people working for us mainly because we offer the machine and services to a customized clientele. We need to control the work and equipment the members of our staff use for quality assurance and consistency as well as own copyright to the work our employees create. Additionally, hiring an employee is more advantageous for our company seeing marketing is very central to our business. Being a company seeking to advance to the next level, our company cannot afford any unnecessary brushes with the law. ICs expose a company to more scrutiny from the IRS to ascertain that the self-employed income taxes paid by the contractors are accurate. Additionally, if an IC gets injured on the job, they can sue for damages and as such increasing business liability while the compensation insurance covers an employee’s injury. Therefore, with careful consideration and analysis of the current position of our company an employee will be less risky and more beneficial to RollinSilver than an independent contractor.

 

Date: November 20, 2017

Subject: Nonwork-Related Injury Scenario

The work regulations in the country allow for much leniency for injured employees whether the injury is work-related or suffered outside of the work setting. Tommy Hanson has been with us for a very long time and as such making his case very delicate. Our workers’ compensation program allows us to bring back our employees back to work on light duties especially if the employee was injured at work. In Tommy’s case, his accident occurred outside of work and as the circumstances differ bearing in mind that his previous post includes of the intense physical movement and vigor. Additionally, most of the positions available in the company involve of the intense physical movement which is problematic given that Tommy had suffered broken legs and pelvis. Since his injury occurred outside the workplace, we are not legally bound to return him to work either on light duty or a different role as the risks of suffering a work-related injury or worsening his current situations are very high.

However, according to the doctor’s report, Tommy’s injuries could eventually render him disabled and as such expose the company to scrutiny from the American Disability Act (ADA) for illegal termination and discrimination. What we should consider while handling Tommy’s case since he cannot perform all the duties of his current job is several restrictions offered by the ADA. To make a sound and fair decision for termination or otherwise, the answers to the following questions should be ‘no’. Are the duties that Tommy cannot perform essential to the job? If not, is there reasonable accommodation or changes to his work location that can be done to allow him to perform his duties? If not, is there any substantially equivalent job that Tommy can perform with or without reasonable accommodation? If no, is there any other job even though not equal to his current position in payment and working hours that Tommy can perform? If the answers to all the questions are “no”, despite being willing and accommodative to the health conditions of Tommy, it will not make economic sense for the company, and I would advise that he is given the standard send-off package. However, if he could be reassigned to other duties or another job pending his recovery or for a longer time frame, I would advise we bring him back to work to avoid any lawsuits.

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