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When do long-term consultants become employees?

by on
in Employment Law,Human Resources

Q. We have some paid consultants who have been working for us for two years. Are there any ramifications if we refer to these consultants as “staff” and enter them in a national database as our staff? — Becky, Nevada

A. Yes, absolutely. Consultants have brought several prominent and successful lawsuits claiming they were entitled to employee benefits and other advantages of employment. Some of the best-known cases were brought against Micro­­soft in the 1990s after its stock became quite valuable.

You may also be tagged with “joint-employment” status if your organization directs the consultant’s day-to-day work closely. If they are not employed by another independent entity, you might experience employment tax complications as well.

As a result, many employers have adopted strict policies against hiring consultants for long periods (such as a year). Consult a local attorney to see what’s best for your organi­­za­­tion. If a perceived risk exists, consider converting these indi­­viduals to employees, or regularly replacing the individuals who perform that role through any third-party contract.

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