Employee or 1099er? Better Know the Difference Before You Hire

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(DGIwire) — The problem starts with control: Be at work in the office at 8 am. Sit at this desk and work with this team. Only use the email we assign you for your work with us. Make sure you check in exactly when we’ve asked you to. If we lose this client—it’s your fault.

“When money is involved, every employer would like a certain amount of control over its workers,” says Rebecca Cenni, founder and CEO of Atrium Staffing, focused on contingent workforce management for more than 20 years. “However,” Cenni elaborates, “it is that desire for control that often becomes the defining factor between freelancer versus employee when the IRS and other tax authorities, along with employee defense lawyers, come calling.”

Simple items such as establishing set hours, issuing a corporate computer or workstation, assigning a corporate email address or defining a role within your corporate hierarchy—individually and collectively begin to define the roles of employee versus freelancer status. Getting the difference straight on day one for any employee is paramount. Getting it wrong means back payroll taxes, social security fines and fees, workers’ compensation and disability insurance collections. Then, of course, there are sick days and vacation that get calculated and added into the past-compensation mix as well. Multiply all of this by large numbers of employees, past or current, and you can begin to imagine that the collective fines, fees and compensation could create a big impact on the corporate profit bottom line…fast.

As the saying goes: ignorance of the law is no excuse. Before bringing on that next freelancer, consider it mandatory to seek professional advice.

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