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Can we hire contractors and later–if they work out–convert them into employees?

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in Hiring,Human Resources

Q. We’re expanding our marketing efforts over the next few months. Because we don’t have much time to go through a rigorous recruitment effort, we are considering hiring a number of people on a contractor basis. If they work out, we’ll then consider hiring them as employees. Can we do that?

A. Worker misclassification claims are on the rise, so you should be cautious. The label placed on a worker does not determine his or her legal status as a contractor or employee. Rather, courts look to the reality of how the individual functions to determine the correct work status.

A few things to consider: Does the individual maintain his or her own business? Offer his or her services generally to the public and have more than one client? Use his or her own tools to get the work done? Does the individual control the manner, means and timing of doing the work?

If the answer to these questions is yes, it’s probably a contractor relationship. If any of the answers is no, however, more analysis will be necessary.

The consequences of improperly classifying someone as an independent contractor can be severe, exposing a company to wage-and-hour, unemployment, workers’ compensation and tax law claims. Don’t hesitate to reach out to an attorney for help, as this analysis can be tricky.

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