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The Mistake of a Business Owner in Misclassifying a Worker

Hypothetical: Jessica owns Jessica’s Cleaning Services, LLC. Her business provides residential cleaning services. Jessica uses independent contractors. That way, she does not have to provide workers compensation, pay taxes on her workers, and it provides her with the flexibility to terminate a worker without worrying about all of those “pesky employment laws.” However, Jessica advertises that her workers are employees and refers to them as such. Jessica has been cautioned by her friends that her workers are employees, and that she is going to find herself in legal trouble one day. She ignores it because it “isn’t a big deal.” Then, one day, her best employee, Barb gets hurt on the job. Now, Barb is demanding that Jessica’s Cleaning Services, LLC cover the cost of her medical care and the time that she is off of work. Jessica decides that she needs to seek the advice of a business attorney.

The business attorney explains to Jessica that misclassifying a worker as an independent contractor is one of the top mistakes business’ make. The consequences can often put a business under, and there is always the possibility that criminal charges could be brought against the business owner.

Jessica explained to the business attorney that she had heard that there were serious consequences, but since her workers all wanted to be classified as independent contractors, she did not think it was a problem. However, Jessica quickly learns there is a huge problem and a worker’s request to be classified as an independent contractor does not absolve Jessica of liability. The penalties and fines will most likely cause her to lose her business that she had worked so hard in the past ten years to build.

Jessica learns that there are multiple definitions of independent contractor. A worker can be deemed to be an independent contractor under one definition of the law, but an employee under another definition of the law. In Jessica’s case, under all applicable areas of law, Jessica’s workers are employees. All of her workers work exclusively for her, Jessica tells them what hours they work and where they are going to work, and Jessica provides the cleaning supplies and equipment.

Jessica is floored. She then decides she needs to close her business, which Jessica is told is not a guarantee that she will not face additional consequences. Such a “guarantee” cannot be made.

Spangler and de Stefano, PLLP represents businesses regarding the classification of workers.

The material contained herein is for informational purposes only, and is not intended to create or constitute an attorney-client relationship between Spangler and de Stefano, PLLP and the reader. The information contained herein is not offered as legal advice and should not be construed as legal advice.