A recent client called and claimed that they would go the “Uber” route and classify all of their current employees as Independent Contractors as they no longer “wanted the hassle of overtime, lunch/rest breaks and payroll taxes.” I listened politely as they continued to explain how so many companies they had heard of including call centers, delivery services and retailers now just used Independent Contractors instead of full-time employees, and saved hundreds of thousand dollars in labor expenses. I asked them a few simple questions. Would the person control their time? An emphatic no. Could they work from home? Maybe. Would they have to be in uniform. They sounded unsure.
Based on just those few answers, I told them that it was unlikely the employees could be classified as Independent Contractors. Moreover, while it sounded like an easy way to reduce costs, the costs and possible liability for a miss-classification by even one person could run into those same hundreds of thousand dollars that my client wanted to save, making not only unwise, but potentially disastrous for their company.
It is always advisable to seek legal counsel for company wide changes especially those involving classifications, pay changes, and difficult terminations.
January 24, 2017
