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Small companies usually favor to deal with staff as unbiased contractors for any variety of causes: avoiding the hassle of calculating and paying worker withholdings; escaping the employer’s required bills for unemployment insurance coverage, staff’ compensation, and different prices; and, freedom from time beyond regulation and different wage and hour rules. In brief, treating workers as “unbiased contractors” can exert a robust attraction on a small enterprise.
Like many different sturdy temptations, treating an worker as an unbiased contractor can even lead on to hell if the worker is just not one. The litany of hellish penalties, each for an employer and for its accountable officers and fairness house owners, is sobering.
First there are the unpaid withholdings for which not solely the employer but additionally its accountable officers and administrators might have joint and a number of other private legal responsibility. Officers, administrators, members, managers, companions and restricted legal responsibility companions are additionally personally liable, collectively and severally, with their enterprise entity and one another for all claims’ prices, civil penalties and legal professional charges if it is decided that the ” unbiased contractor” was actually an “worker” after they had been injured whereas working. ORS 656.735.
When a misclassified worker is injured on the job, they aren’t solely free to carry a private damage motion in opposition to their employer however the employer loses the good thing about any protection based mostly on the worker’s personal contributory negligence. ORS 656.020.
Likewise, people accountable for compliance with an employer’s unemployment insurance coverage could also be held personally liable, collectively and severally with one another and with their employer, for unemployment advantages and declare prices for an worker misclassified as an unbiased contractor. ORS 657.516.
Accordingly, whether or not to deal with any particular person offering providers to a enterprise as an unbiased contractor is a call which ought to be made with warning. A mistake couldn’t solely harm your online business however drain your private funds as properly.
© 12/12/2013 Lawrence B. Hunt of Hunt & Associates, P.C. All rights reserved.