How do you know if your hire should be classified as an independent contractor or an employee?
In Ohio, the Ohio Department of Job and family Services (ODJFS) lists 20 questions you should ask yourself if you are a business owner looking to make a hire.
Why is this important?! If you are calling your hire a contractor, but your hire is actually an employee…it’s bad news for you because, if investigated, you could owe lots of money to the state for failing to withhold certain taxes.
It’s an expensive mistake to make, so as a business owner, you must understand if your hire should be classified as an employee or if the hire can be classified as an independent contractor.
So, pay attention to ODJFS list below!
1. Who directs or controls the manner or method by which instructions are given to the individuals performing services?
2. What training is required for the individual performing services
3. How are the services provided integrated into the regular functions of the employer?
4. By whom does the business require that services be provided?
5. Who hires, supervises, and/or pays the individual performing the services?
6. What type of relationship exists between the business and the individual performing the services which contemplates continuing or recurring work, even if not full time?
7. Who sets the time (hours) during which the individuals services are to be performed?
8. How much time does the business require the individual performing the eservices to devote to the business?
9. Where does the business require the work be performed?
10. Who sets the order of work the individuals follow while preforming services for the business?
11. What type of reports, oral, or written, does the business require the individual to submit?
12. How are the individuals performing services paid?
13. Who pays expenses for the individual performing services?
14. Who furnishes the tools and materials used by the individual performing services?
15. What investment do the individuals performing services have in the facilities used to perform the services?
16. What is the profit or loss to the individual performing services as a result of the performance of such services?
17. Do the individuals performing services also perform similar services for other businesses, if yes, whom?
18. How do the individuals performing services make their services available to the general public?
19. Does the business have the right to discharge the individuals performing services? If yes, in what manner?
20. Do the individuals performing services each have the right to end the relationship with the business, without incurring liability pursuant to an employment contract or agreement? If yes, how?
Another authority on this subject is the IRS. And, here’s what the IRS has to say:
• Behavioral control: are you controlling a person’s working hours, the tools they use. Are you providing training and mandating how they do their job? if so, this might be an employee.
• Financial control: If a person’s services are available to other businesses, or the person has a business of their own and works with whomever they want, they are likely a contractor. If they are only working for you, and the expectation is that they only work for you, then that’s an employee.
• Relationship: Are you providing benefits, if so, they are an employee.
Listen, if you are a hair salon, massage therapist looking to hire, a tattoo studio looking to hire, a wedding planner seeking help…this stuff is highly applicable to YOU!!
Contact Wick law if you’d like help analyzing your hires to understand if they are truly contractors or employees. Email me! firstname.lastname@example.org. Call me with your questions! 614-572-6366
Wick Law, LLC is a small business legal practice, representing owners, investors, and entrepreneurs in all aspects of commercial, corporate, and business law, estate planning, contracts and negotiations, business litigation, and real estate. For more information: Contact 614-572-6366, visit www.mwicklaw.com, or email us at email@example.com. Wick Law, LLC is located in Columbus, Ohio.
(Materials in this article have been prepared by Wick Law, LLC for general informational purposes only. This list is for educational purposes and is not to be considered exhaustive. More items could be added to this checklist based upon the type of transaction or industry standards. These materials do not, and are not intended to, constitute legal advice. The information provided is not privileged and does not create an attorney-client relationship with Wick Law, LLC or any of the firm’s lawyers. This checklist is not an offer to represent you. You should not act, or refrain from acting, based upon any information in this checklist. Wick Law, LLC maintains offices in Columbus, Ohio, and has lawyers licensed to practice in Ohio and in the United States District Court, Southern District of Ohio. The firm does not intend to practice law in any jurisdiction where the firm is not licensed.)
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