employee vs contractor. When it comes to pay taxes and social benefits of workers filing questions.
On July 15, the Department of Labor (DOL) published the interpretation of a director by emphasizing the importance of the classification of workers and clarify the difference between employees and independent contractors.
New DOL Clarification independent contractors
The recent DOL interpretation (administrator interpretation No. 2015-1) is important because it clarifies the difference between an employee and a contractor.
To summarize, the DOL notes that :.
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Under the FLSA, most workers are employees
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The main approach to determine whether a worker is an employee or contractor is the "economic realities" test, explained below.
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the effort of employer control over the work performed by the worker is less important.
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DOL continue to actively consider. classification of workers as contractors
Related:
contractor vs employee - economic realities test
testing economic realities look if the worker is economically dependent on the employer or in business for him or herself.
To conduct an economic reality test an employer should consider six factors:
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The extent which the work performed is an integral part of the employer's business.
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mark the worker for profit or loss depending on his or management skills.
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extent of investments related to the employer and the worker.
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Whether the work requires skill and special initiative.
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permanence of the relationship.
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the degree of control exercised or maintained by the employer
Related :. How to recruit - Prepare to Hire Before you take the plunge
Conclusion
If your small business uses independent contractors, or thinking to go this route, it is important to make the workers classify you correctly.
Under new leadership, the DOL noted that most work must be performed by employees. In addition, the focus is on the test of economic realities.
What questions do you have about the difference between employees and contractors? Leave a question below.
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