Hiring Contractors? What the NLRB Ruling Could Mean for You

Browning Ferris IndustriesFrom Inc., John Boitnoit discusses the recent National Labor Relations Board decision in Browning-Ferris Industries of California that said that a company may serve as a joint employer of a contractor.  John offers his opinion for what this means if you hire on-site or remote contractors.  John writes:

If You Hire On-Site Contractors

In recent years, abuse of contract work setups has been documented, with the Department of Labor naming it “one of the most serious problems facing affected workers.” Instead of hiring full-time employees, businesses can use contractors to fill empty spaces in their organizational chart. This eliminates the need to provide health insurance or pay payroll taxes on those workers, while also giving them the freedom to move between contractors at will.

Some businesses opt to work with contractors for temporary purposes. Talented professionals are brought in to design a new application or oversee a restructuring process. The IRS has clearly-defined definitions of employees and independent contractors, stressing that with independent contractors, the business only has the ability to request a specific outcome of work, not direct how it is performed. With the NLRB’s expanded definition, this could also mean employers may not be able to dictate work hours for independent contractors, even when they are being brought in to perform a task that requires a full workweek.

If You Hire Remote Contractors

For remote contractors, the situation gets murkier. Companies like Uber have been under fire for categorizing their workers as independent contractors rather than employees. This type of worker generally sets his own hours and serves as his own boss, which is the very work environment that appeals to most of these workers. However, most companies like these have regulations that drivers must adhere to in order to maintain the corporate reputation, leading to the question of whether or not these are fully independent workers.

To be safe, businesses that use contractors should be careful in assigning work duties and requirements. Deadlines and specific outcomes are to be expected, but requiring projects be completed in a certain way during certain work hours can put a business in a position where it is seen as trying to bypass its tax and insurance obligations.

The NLRB ruling is still in its infancy, so it remains to be seen how this will fully impact businesses. By researching the IRS’s definition of independent contractors and staying safely within its scope, you can protect yourself against being found in violation.

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