can I make employees of one company employees of my company for the purpose of fulfilling a contract?

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can I make employees of one company employees of my company for the purpose of fulfilling a contract?

I run a company that that specializes in fulfilling government contracts. I want

to fill a government contract for the rental of a few hundred sanitation stations

port-a-potties, and I would fill that contract by subcontracting down to a

sanitation company that actually does that kind of work. Can I make the employees

of the vendor my employees as well? Or should they just be categorized as

independent contractors?

Asked on April 23, 2018 under Employment Labor Law, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

If they are employed by someone else (e.g. are on someone else's payroll; receive a W2 from another company or employer), then they are not your employees--unless, that is, you actually employee them, too. (Remember: people can have more than one job.) If you put them on your payroll and issue them W2s, they can be your employees; of course, if they are your employees, you must pay them at least minimum wage; will have to withhold taxes from their wages; will have to pay the employer portion of social security/Medicare taxes for them; will have to contribute to unemployment for them; may have to provide Worker's Compensation and benefits; etc. That is, you'll have to provide them everything employees are entitled to.
As to whether they are independent contractors of yours: they are only your independent contractors if you pay them directly and issue each a 1099 at year's end. If you pay their company for their services, that company, not its employees, is your contractor.


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