These days, the pandemic has brought a new normal — working from home. As a manager, this remote working needs a proper understanding of the lines between contractors or employees. This is because there are specific requirements by the law if your team is in either category.
It means that there are legal actions against a company that takes employees as contractors and fails to abide by the commercial agreement laws. What is essential, therefore, is knowing what separates an employee and contractor by definition.

Who is an Employee?

Anyone receiving a salary monthly and working on a full-time basis is by definition an employee. However, there are other crucial details left out. The IRS (Internal Revenue Service) and the labor department saw the confusion between an employee and a contractor, highlighting the differences.
They base their guidance on three broad variables: behavioral control, working relationship, and financial control. This means you need to give instructions to the workers, train them, and monitor their work. Again, there need to be clear indicators of you controlling the payments, expenses, profits, and payment methods. Lastly, if you provide insurance, other benefits such as vacation pay, and a permanent job, the worker is your employee.

What Defines an Independent Contractor?

When hiring a worker and you start receiving the services as a company, many managers fail to determine the nature of their work. This is especially when they are working remotely. Primarily, an independent contractor is anyone who is offering services as a fee. The services are mostly specialized, and the contractor can have their own working space or team of workers.

Providing Pay Stubs for Your Remote Employees

These days, some tools help a company quickly engage remote workers, including independent workers. One example is the use of pay studs. These documents allow payroll processing to be easy. On the other hand, the workers get to see all the analysis of their payments, including their taxes. The process of creating these pay stubs is also effortless. With a check stub maker online, fill in all your details, and you are through. Workers have the opportunity of retaining their financial information after losing crucial documents. All they need is to go online and recreate their pay stubs.

Benefits of Understanding the Employee and Contractor

Many managers may get mixed up in knowing the difference as the boundary is not that clear. This is especially when there is no proper research and guidance. There is a negative implication of this. The authorities, for instance, will never take it as a misclassification but rather an intentional way of evading duties. Through this, they get the image of a business manager trying to reduce employment expenses and costs.
The IRS and DOL (Department of Labor) have found many companies resolving to have independent contractors rather than employees as it makes them not pay additional costs over overtime. This is because a contractor only receives only the agreed amount. Additionally, a business owner may not need to provide the benefits.
This means that if you classify your staff as employees and you hardly provide them with the right benefits, there may be some legal laws that the authorities can use against you. It is crucial to, therefore, get guidance for lawyers when hiring employees when need be. They will help you in signing the proper documents and guiding policies for your labor force.
It is common to find workers working these days remotely. However, there is a lot to learn about what defines an employee and contractor. It helps make the company in line with the Internal Revenue Service and Department of Labor requirements. Besides, you become safe from any legal actions when you do a wrong categorization of the workers.


Claire Ward