Do you have employees and contractors in your organization? Believe it or not, how you label your workers does matter. Workers who are labeled as independent contractors may not be entitled to equal rights and benefits as those labeled as employees.
Whether intentional or deliberate, misclassification can have serious impacts on the organization and the affected workers. So how do you know if you have properly classified your workers?
Here are three questions that can help you establish if you are misclassifying your workers.
Are you prohibiting them from working for other employers?
An independent contractor has the liberty to offer their services to more than one client at any given time. If your contractual agreement with the worker prohibits them from working for someone else during the term of your engagement with them, then chances are you are misclassifying them.
Is the engagement indefinite?
Typically, an independent contractor is engaged to complete a specific task or render their service for a specific time period. Thus, the contractor-employer engagement automatically ends upon completion of the task or the expiry of the contract period. If your working relationship does not have a definite scope or timeline, then you need to find out if this can lead to misclassification.
Are they doing the same work as the other team members?
Again, an independent contractor is recruited to perform specific tasks that require specialized skills. If you hire an independent contractor who ends up performing the same roles as your regular employees, then there is a pretty good chance that you are misclassifying them. To confirm your concerns, you might want to find out if you are exercising the same oversight over their job as you are with the other employees.
Misclassification robs employees of vital rights and privileges. It can also lead to costly penalties and other consequences for the employer. Find out how you can protect your organization from the risk of employee misclassification.