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Schaumburg employment defense attorneyThe COVID-19 pandemic has changed the way we live and work. Employers and employees alike have adapted to different work situations and environments, including more flexible remote options. Statistics show that independent contractors made up 6.9% of the total number of workers employed in 2017. As a business owner, you may have full-time, salaried employees or part-time, contract employees, or a combination of both. Independent or freelance workers can provide several benefits, such as special knowledge or skills, staffing flexibility, and overall cost savings. However, it is important to note the legal requirements and differences between independent contractors versus salaried employees. 

Thinking Outside the Box

Although independent contractors typically charge an hourly rate, this can be cost-effective in the long run. If they are experts in their field, this saves time on training and onboarding. In addition, they only need to be employed for a designated amount of time, or as long as a project takes to be completed. Many employers are able to verify a contractor’s reputation by speaking to other companies that used their services, or by reviewing samples of their work. 

Since freelance or independent contractors are used on a temporary basis, employers may have concerns about potential conflicts of interest or the sharing of information with competitors or future clients. It is possible to include a clause in a contract outlining the rules regarding ownership of intellectual property or confidential information such as business ideas, financial data, and trade secrets.

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employee, Illinois employment lawyerIt can be easy to misclassify a worker, especially when it comes to small businesses. There are a few different classifications that employees can fall under, such as employee or independent contractor, salaried or hourly and overtime exempt or non-exempt. Assigning the wrong status to a worker can bring costly consequences like liability for employment taxes, required payment of back wages, and other penalties. In order to avoid such trouble that will bring nothing but headaches, you should know exactly what constitutes certain designations and how to determine how you should classify a worker.

Independent Contractor vs. Employee

The first determination you should make is whether or not you technically have an independent contractor or an employee. The Internal Revenue Service (IRS) has developed a set of criteria to help employers make this designation. The IRS states that there are three areas where you should look to figure out if your worker is an employee or an independent contractor.

Behavior

Typically, workers are considered to be employees if the employer has the right to control and direct the work performed by the worker. Your worker may be an employee if:

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contractors, Schaumburg employment law attorneyWhen your business requires extra hands, you have two choices. You can hire employees or you can enter into contractual agreements with independent contractors. As you probably are aware, there are advantages and disadvantages to each, and it is important to choose the one—or the appropriate combination of the two—that best meets your company’s needs. The challenge, however, is that it is up to you as a tax-paying business owner to classify your workers properly in accordance with state and federal law, as failure to do so can result in serious financial penalties.

Moving Company Claims Movers Are Contractors

Last month, an Illinois appellate court issued a decision in a case that has been ongoing since 2009, when a former worker for the moving company filed for unemployment benefits. The Illinois Department of Employment Security realized, at that point, that the moving company had not reported any of the worker’s wages. Looking further, the Department discovered that approximately 90 other drivers and physical laborers should have been listed as employees but were not.

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uber, Illinois employment law attorneyThe Uber driver that initiated a lawsuit against the ride-sharing company almost three years ago has come out against the $100 million class-action settlement to which he had previously agreed. The man now believes that the deal was misrepresented to him by his attorneys, and that he was forced to agree to its terms under duress and false pretenses. Still awaiting approval from a federal judge, the settlement would allow Uber to continue to classify its drivers—which the company calls “partners”—as independent contractors rather than employees.

Suit Sought Reimbursement for Mileage, Tips, and Expenses

Throughout the country and around the world, Uber drivers are classified by the company as independent contractors, as drivers are free to set their own schedules and areas of operation within the cities in which they are approved to drive. This means, however, that drivers are responsible for all tax reporting, as well as any and all expenses they may incur. The issue has been broached previously in cases involving accident liability and workers’ compensation, but the recent class-action suit was arguably the most widely covered by various news outlets.

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contractors, classification, Illinois Employment Law AttorneyAs a business owner, you are most likely very aware that the misclassification of your workers as either employees or independent contractors can have a dramatic impact on your company. If done incorrectly, you could be facing serious fines and penalties imposed by the IRS. Rarely, however, do such concerns get played out on a national stage, but over the last few months, the ridesharing provider Uber has faced a large concerns regarding the employment status of its drivers.

In early June, the California Labor Commissioner’s Office found in favor of a former Uber driver who claimed that the San Francisco-based tech company owed her more than $4,000 for unreimbursed business expenses. The ruling, although limited to the driver’s case alone, essentially declared that she was employee of Uber, and therefore, eligible for the reimbursement. Uber maintains that those who drive for the company are independent contractors.

As a software development company, not a transportation carrier, Uber holds that it is merely providing a marketplace in which riders and drivers can be connected. A driver uses his or her own vehicle, may use a personal cell phone or lease one from Uber, and sets his or her own hours. While a driver may be limited to the city in which he or she has been approved, Uber has no requirements regarding where within the city a driver must work. Based on the company’s claims, it would seem like drivers are independent contractors.

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