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Printing businesses today face a very difficult task. One of the largest expenses is the hiring and maintenance of those who work for them. Some shops tend to shift these expenses back to the person contributing work. That is, they retain independent contractors, and not employees.
The use of independent contractors is sometimes critical. However, printers must be careful because, when hiring an employee, there are certain responsibilities that come with them, including withholding income, social security, and Medicare taxes.
Printers do not have the same obligation with independent contractors who are responsible for their own expenses. If a mistake is made in the retention, the business may be required to treat the independent contractor like an employee, however, losing the benefits.
Attributes of an Employee
No less than the United States Supreme Court and the IRS have grappled with issues as to what constitutes an employee.
Determining whether a person is an employee or an independent contractor may include whether: the worker must comply with instructions on where and how the work is done; there is training; services are personally rendered; they are responsible for hiring, paying, or supervising an assistant; the working hours are set by the employer; or the worker is subject to discharge without employer penalty.
What's an Employer To Do?
Further, the issuance of a Form 1099 (rather than a Form W2), and a contract that says the person is an independent contractor does not necessarily mean he or she is one.
The courts and the IRS will also review these matters on an individual basis to ensure the person is an employee and not an independent contractor. As such, printers must consider the above factors when retaining any independent contractor.
If the business wishes to avoid paying added employee costs, it must take steps to ensure they are hiring independent contractors.
For example, the shop may consider making sure the independent contractor is self-insured; has a real office; pays their own expenses; determines their own schedule, as well as fees; permits them to turn down work; and hire their own employees. This is not an exhaustive list. However, every situation is different, and a business should consult with experienced counsel to avoid liability.
In summary, printers must be careful in retaining independent contractors because, in the blink of an eye, the person may become your employee with all the attendant responsibilities and rights.
Ernest E. Badway is a partner with the New York and Newark, N.J., law firm of Saiber Schlesinger Satz & Goldstein, LLC, practicing business law where he advises and counsels numerous printing clients on corporate, business, litigation, employment, and many other matters. Mr. Badway may be reached at eeb@saiber.com, (212) 461-232, or (973) 622-3333.
author: By Ernest Badway