The government is placing more emphasis on finding misclassifications of employees as independent contractors and exempt workers, according to labor attorney Frank J. Morris.
Making sure your salaried workers clearly meet one of the common exceptions for hourly pay - administrative, executive, professional, outside sales or computer-related - is relatively easy but does require reviewing the standards listed in the exemption tests on the Fair Labor Standards Act website and making sure employees meet them.
Employers need to make sure their workers meet each requirement of the applicable test or else they will have to track time and attendance for hourly pay purposes.
Similarly, businesses using independent contractors should consider the employer-employee relationship test, which is more nuanced than the salaried worker exemptions. The seven-part test contains some subjective questions that should be addressed in the contractual language used to hire contractors.
Typically, independent contractors are not entirely reliant on the business with which they have a relationship, do not have their hours or methods of work controlled and are only given a final goal or result they must meet. Other considerations include the opportunities for the contractor to make or lose money as well as the degree of independent organization, apart from directives or orders from a company, on the part of the contractor.
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