Andrew Abramowitz, PLLC

attorney at law

 LinkedIn RSS E-mail
  • Home
  • Practice
  • Our Team
  • Fees
  • Blog
  • Contact

Employee vs. Independent Contractor

April 16, 2015 By Andrew Abramowitz Leave a Comment

In my practice, the question of classification of service providers as employees or independent contractors has come up with increasing frequency.  This probably results from the increasing amount of freelancing in the economy in recent years. It’s also been in the mainstream news recently, with highly publicized actions against Uber and Lyft for alleged misclassification of their drivers. A classification of a worker as a contractor is generally preferred by companies, as it eliminates a wide range of costs and legal protections available only to employees, e.g., unemployment insurance, workers compensation, tax withholding, minimum wage and overtime laws. Because of this, federal and state regulators are increasingly scrutinizing classification issues, and employers need to be aware of this and be careful and conservative in their classification decisions.

Employee vs Independent ContractorThe law in this area is highly fact-sensitive, which is the type of law that non-lawyers hate because it doesn’t provide definitive guidance, but you can see how the system would be gamed if there were objective standards. For example, if a work week of less than 40 hours automatically made you a contractor, you’d see a lot of people being hired for 39 hours per week.  So, the IRS and state regulators list various factors to consider in making a classification determination, none of which individually are determinative.  This is a useful chart listing various factors that tend to be found among employees or contractors, respectively.  The key thing to remember is that job title is irrelevant; it’s all about the substance of the working relationship and the degree to which the details of the service provider’s performance of the work is controlled by the company.  Also, the fact that the company and the service provider agree on a particular classification isn’t relevant to the analysis.

Facebooktwitterredditlinkedinmail

Related posts:

  1. Should Vendors Agree to Be Paid in Equity?
  2. Are 409A Valuations a “Shell Game” and a “Dirty Little Secret”?
  3. Can Employee Autonomy Initiatives Be Implemented in Big Law?

Filed Under: General Corporate/M&A Matters

Leave a Reply Cancel reply

You must be logged in to post a comment.

Search the Blog

Blog Topics:

  • Crowdfunding
  • Financing Transactions/Securities Offerings
  • General Corporate/M&A Matters
  • General/Miscellaneous
  • Interesting Reads Archive
  • Legal Practice Advice
  • SEC Disclosure Matters
  • Startup Matters

Press Coverage

"Andrew Abramowitz, a lawyer in Manhattan who has worked with both buyers and sellers of private placements, said every investor should approach a private placement skeptically." -- Paul Sullivan (New York Times)

» Read more

"If the goal [...] is to protect people from losing all of their money in an illiquid investment, the current standard fails on that count, too. Andrew Abramowitz, a lawyer in Manhattan who has worked with both buyers and sellers of private placements, said a better standard might be to limit how much of their net worth people can invest." -- Paul Sullivan (New York Times)

» Read more

Sign up for Andrew Abramowitz, PLLC's Quarterly Newsletter

Your contact information is never shared or sold to any third-party.
* = required field

Browse the Blog

  • Crowdfunding
  • Financing Transactions/Securities Offerings
  • General Corporate/M&A Matters
  • General/Miscellaneous
  • Interesting Reads Archive
  • Legal Practice Advice
  • SEC Disclosure Matters
  • Startup Matters

Rankings & Awards

Ranked #7 nationally issuer legal counsel for total dollars advised in a PIPE transaction. (PrivateRaise.com January 2016)

Find & Follow

Follow Andrew Abramowitz, PLLC on LinkedIn.

Contact Info & Directions

©2019 Andrew Abramowitz, PLLC. All rights reserved. | 565 Fifth Avenue, 9th Floor, New York, New York 10017 | Legal Disclaimer