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


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 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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