Recently I attended the first of a three part free breakfast series focused on providing women entrepreneurs with information on starting and running their own business. One of the topics discussed by the attorney presenting at this session was classifying employees and how to tell if an independent contractor is really an employee. This is what I learned:
- An Independent Contractor has what is called Freedom Of Control. This means that you are not able to micro manage this person’s workday. You can give them the scope of services to be performed but then you can not turn around and tell them when to start and end their work day, impose a dress code on them or hold them to your company’s standard.
- An Independent Contractor should not go out of business because you went out of business. An Independent Contractor should be doing the same kind of work that they do for you for other companies. If you are telling your Independent Contractors that they cannot do work for other companies then you may be treating them as an employee.
- An Independent Contractor should not perform essential functions of your company. If they are performing essential functions they may be considered an employee instead of an Independent Contractor.
For More information about how the IRS classifies employees versus Independent Contractors, please click on this link.
I am not an attorney and I am not providing legal advise. If anything you read causes you concern as an entrepreneur or small business, please seek legal counsel. Courtney Ross Escobar, Esquire was the presenter at this awesome and informative workshop. She is the Managing Director for Ross Escobar Group. You can contact her via her Facebook Page.
She also talked about Trade Secrets. A Trade Secret is something that you use or have that gives you an edge against your competition. For example, what Coca-Cola puts inside of its soda is a Trade Secret. The formulas that I use to make my Hair & Body Butters is a Trade Secret. How I make my products is a Trade Secret, but in order for it to hold up in court you have to do the following:
- Keep your Trade Secret locked up. It doesn’t have to be a safe, it can be as simple as a locked filing cabinet.
- Anyone that will be working with your Trade Secret has to be put on notice that it is your Trade Secret. Your employees that assist you in making your product need to be told it is a Trade Secret.
Please share in the comments if you’ve had any experience with these classification issues.