Employee or Independent Contractor
If you own a growing business in Kansas City, you may have found the need to seek help in carrying some of your workload or you may be contemplating expanding your team. When faced with these growing pains, many times, the first question a client will ask is: “Should I hire an employee or utilize an independent contractor?”
There are advantages and disadvantages to both options. In many instances, an employee or an independent contractor can be hired to do the same work. There are however, key legal differences between the two types of workers.
In my experience, one of the biggest benefits of hiring an employee, is that the relationship would afford both the business and employee a longer term and secure working relationship. An employer can implement more control over when and how the work is to be performed, if they are utilizing an employee as opposed to an independent contractor. A business’s work agreement may be more exclusive and binding upon an employee as opposed to an independent contractor.
One small example is, an employer may require an employee to be in the office each day at a set time but could not necessarily make the same demand upon an independent contractor.
One of the potential drawbacks of hiring an employee can be the paperwork required for their employment. Generally, a business must withhold income taxes, withhold and pay Social Security and Medicare taxes as well as pay unemployment taxes on wages paid to an employee. Other considerations to consider include providing benefits such as insurance and vacation.
An independent contractor should be treated as their own business. A business may choose to work with an independent contractor for many different reasons. One of the benefits of utilizing an independent contractor is that you can use them on an “as needed” basis. For a lot of business owners, the advantage of having a flexible work force outweighs the disadvantages of giving up control over that work force, for those business owners an independent contractor is a great choice.
One example of how an independent contractor offers more flexibility to the business is, the business owner will not be responsible for providing a contractor with a space to work or the equipment needed to complete a task.
A few of the disadvantages to utilizing an independent contractor may include: the inability to utilize restrictive covenants (such as a non-compete), the inability to terminate the working relationship at any give time (KS and MO for example are at-will employment states) or the inability to exert other controls over the contractor.
If you would like legal advice on the benefits of employee versus an independent contractor and are in Kansas City, Overland Park, Lenexa, Lee’s Summit or anywhere else in the metro, Jeff Coppaken will walk you through the pros and cons of both based on your business needs and goals. The choice to label a worker as an employee or an independent contractor may have serious legal ramifications for your company and should only be done after carefully considering your options.
Call for your free consultation. 913.225.8951