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Should we give reviews to independent contractors?

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in Compensation and Benefits,Human Resources,Leaders & Managers,Performance Reviews

Q. We have several independent contractors working at our company, as well as many regular employees. We give performance reviews to regular employees, but not the independent contractors. Should we? —M.L., California

A. You’d be best to perform reviews for employees, not for independent contractors. Here’s why: The more you treat independent contractors as your employees, the more likely you’ll lose the right to define them as independent contractors.

Courts and administrative agencies apply several different tests to distinguish independent contractors from employees. One significant factor: the degree of control that employers exercise over workers. With that in mind, issuing performance reviews to a worker may be viewed as exercising control over the means employed by the worker to perform his or her tasks, which could make it harder for you to claim the employee is truly an “independent” contractor.

Final tip: Merely labeling a worker as an independent contractor does not automatically create such a relationship. The consequences of improper classification could be substantial, including tax, wage and hour, workers’ compensation and unemployment liability. 

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