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Six Reasons You Do Not Want to Get Your Worker Classifications Wrong

Nance Schick · May 5, 2021 ·

Several employers did not like reading the information in my earlier posts on this topic. I get it. You might have worked as an “independent contractor” for someone in the industry where you now operate your business. You’re just doing what everyone else has been doing. How could it be wrong?

Perhaps you think you are doing your workers a favor by giving them flexible, paid work while they pursue other interests that don’t pay. You’re the good guy. Right? Besides, they don’t work very many hours or very often. How could they be employees?

Even one of my SCORE mentors once argued with me about what makes a worker an employee. He said, “In my mind, if you’re hiring someone as an employee, you’re making an investment in them. You’re giving them regular work, a job they can live off of, not a few hours here and there.” His heart was in the right place, but his advice could have gotten me in legal trouble, if I hadn’t been a lawyer who works with these issues a lot.

For the record, what you think an employee is might not align with what the law determines one is. To sustain your business, you need to make sure you properly classify your workers. Here are six important reasons:

  1. You can be liable for payroll tax withholdings you have not budgeted for.
  2. You can be penalized for not having disability insurance.
  3. You can be penalized for not having workers’ compensation insurance.
  4. You can be liable for an uninsured workers’ compensation claim.
  5. You can be forced to trial in a claimant-friendly, anti-employer forum.
  6. You can be personally liable for the above expenses, despite having established a separate business entity.

https://thirdearcr.com/nance-l-schick-talks-with-gregory-gray-on-the-difference-between-employees-and-independent-contractors/


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Nance L. Schick, Esq., is a workplace attorney, ethno-religious mediator, and conflict resolution coach based in New York City. Her goal is to keep managers and small business owners out of court and build their conflict resolution skills so everyone has a better work experience. She is creator of the Third Ear Conflict Resolution process, author of DIY Conflict Resolution, and an award-winning entrepreneur acknowledged by Super Lawyers (ADR, 2018, 2019 & 2020), the New York Economic Development Corporation/B-Labs (Finalist, Best for NYC 2015 & 2016), U.S. Chamber of Commerce (2015 Blue Ribbon Small Business), Enterprising Women Magazine (Honorable Mention, 2014 Woman of the Year awards).

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