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An employment attorney shared tips for determining if a worker in New Hampshire is an employee or contractor. They included concepts that can help employers everywhere reduce the risk of misclassification.

The IRS

According to the Internal Revenue Service (IRS), people who are in business for themselves are not employees. Even when they do work on behalf of a company, they are considered to be independent contractors. Employers that utilize them do not have to supply health insurance or other benefits to those individuals, so it's important to get this right.

It can be easy to misclassify a person who provides services to an organization. However, making that mistake could lead to a lawsuit and potentially result in a mandate to pay back wages and cover out of pocket expenses the person incurred while they should have been deemed an employee.

Employee Or Contractor?

Here are a few questions to ask when determining which category to use:

Is The Relationship Temporary? When an organization makes an official offer of employment, it is generally meant to be an ongoing relationship. Contractors are routinely brought on to handle a particular project and a timeline for the engagement is often specified. A short-term assignment is frequently an indicator that the person is a contractor.

What's The Level Of Control? Employees typically have tasks given to them and hours during which they are required to work. A contractor, however, has the right to turn down any project. They may also have the flexibility to set their own schedule.

Who Supplies Tools? Most employers furnish the tools and materials their staff requires. This can be anything from a computer to office space or heavy equipment. Contractors might take advantage of tools that are available, but they usually have, and often prefer to use their own.

Are The Skills Outside Of Normal Needs? Businesses hire people to handle a large variety of day-to-day activities. Contractors contribute specialty skills that are not required of full-time employees. When an individual is brought on because they have the talent to tackle a one-time task, it can be an indicator that they are a contractor.

Can The Person Work For Other Companies? Another key factor is whether a person works exclusively for one company, which indicates an employee, or has the freedom to offer services to any business for which they choose to work, which indicates a contractor.

Should Contractors Be Screened?

Hiring managers are sometimes unsure of whether they need to run background checks on individuals who will only render services for a short time. At Backgrounds Online, we recommend screening anyone who might represent your organization, even temporarily.

We think of background checks as small insurance policies that protect your interests. Running them shows you are conducting due diligence to help maintain safe working environments for your staff, customers and the public. These reports can help companies avoid claims of negligent hiring because using them shows they are taking reasonable steps to avoid anyone who might pose an undue risk.

Need Background Reports?

If your business is bringing on contractors, employees or volunteers, please contact us to discuss how we can provide comprehensive screening options. Our experienced team can customize background check packages based on relevant laws, industry standards and your specific needs. We are based in California and available to assist you Monday through Friday from 5am to 6pm PT.