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An Employer Policy on the use of Independent Contractors

An Employer Policy on the use of Independent Contractors might include:

  • All independent contractors must be paid through a purchase order with new screening criteria to determine if the proposed independent contractor meets the IRS qualification standards.

  • PO's will not be processed if answers to the screening questions indicate that the independent contractor would likely be considered an employee.

  • Independent contractor PO's will go through an annual renewal process.

  • In general, employees cannot become independent contractors to their former employers within one year of termination of their employment.

  • All independent contractors must sign the employer's standard professional services agreement and obtain appropriate signatures.

How do you manage the Independent Contractor Relationship? If you...

  • Give them instructions
  • Sponsor their training
  • Set their work hours
  • Require continuous full time work to be done on site
  • Set the sequence of work
  • Provide equipment to get the work done or
  • Require regular reports from them

Then, you should probably be dealing with them as an employee, and not as an independent contractor.


What Options Do You Have?
Option One: Change the parameters of the engagement to meet the
IRS qualification standards.

Option Two: Hire the independent contractor as an employee of your company.

Option Three: Find an outside company or temporary agency, such as Precision Recruiting, Inc., who will hire your worker as their employee, handle all payroll taxes, and "lease" the worker back to you.

The outside company you select to work with must be reputable, financially solvent, and carry the requisite appropriate insurance policies.

 

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