If I run a dog walking and pet sitting business, how would I better understand the limitations I would face if I choose to classify our hires as independent contractors instead of employees?

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If I run a dog walking and pet sitting business, how would I better understand the limitations I would face if I choose to classify our hires as independent contractors instead of employees?

Would I still be able to provide them with policy documents and have them sign non-compete agreements? How much control and direction am I able to exert if they were to be classified as IC’s.

Asked on October 25, 2015 under Employment Labor Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

An independent contractor can be subject to any amount of control or any limitations (e.g. noncompetes) to which they contractually agree; as the term "contractor" indicates, the relationship is a contractual one, and governed by the mutual agreement between the parties. That said, you *can't* classify them as indepenent contractors if, in fact, they meet the test to be employees--misclassifying them can result in you, despite what you call them, being liable for tax withholding, benefits (if you offer them to any employees), UI contributions, overtime (if applicable), etc.
You can find full criteria for when someone is legally a IC on the U.S. Dept. of Labor and IRS websites. In brief, however, if you exercise control over how and when they do their job and essentially supervise them as you would supervise an employee, they are an employee, not an IC, and must be taxed and paid as employees.


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