How Not To Get Sued By Your Independent Contractor?

14 Nov

Many small businesses today use independent contractors  because they can avoid having to deal with the hassles of having employees on their payroll. However failure to watch out for the pitfalls associated with independent contractors can have negative consequences particularly for a small business. It can forced to pay back payroll taxes, social security, disability, and wages. So what should a business owner do?

1. Always have a written agreement with the independent contractor that spells out what his/her duties will be.

2. Do not tell the worker how to do the job other than setting a completion date as to when the work should be completed.The details of how the work will get done should be left to the contractor. 

3. Do not tell the worker where to do the job. You cannot have the contractor work primarily at your business premises. Most contractors have their own office.

4. Do not tell the worker they cannot work for someone else while working for you. Independent contractors must be free to provide similar services to other businesses.

5. Take a look at the IRS guidelines ( or ask your accountant) as to what factors the IRS looks at in determining whether one is an independent contractor. 

Bottom line is to be careful how you define and treat the relationship to ensure they retain independent contractor status.

Stephen J. Gross is an attorney located in West Los Angeles specializing in business, real estate, contracts, corporations, trusts, and asset protection. To learn more please see sjgassociates.com.

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