Part-time Employees v. Independent Contractors Local Government Seminar January 29, 2015 Part-time Employees v. Independent Contractors Presented by: Denis Potvin

Part-time Employee v. Independent Contractors It is important to properly distinguish between the two because employees and independent contractors are treated differently for the purposes of liability, taxes, and employment issues.

Hybrid Economic Realities/Common Law Control Test The Test Hybrid Economic Realities/Common Law Control Test 2 Components: Control Component Economic-Realities Component

Practical Differences: Liability Part-time Employee Employer’s liability to employee Employer’s liability to third party Vicarious Liability Negligent Hiring/Supervision Independent Contractor Employer’s liability to employee Employer’s liability to third party

Practical Differences: Taxation Part-time Employee Form W-2, Wage and Tax Statement Federal Income Tax Social Security and Medicare Taxes Independent Contractor Form W-9 Form 1099-MISC

Practical Differences: Employment Issues Part-time Employee Compensation: Texas Minimum Wage Act Unemployment Compensation Discrimination Civil Rights Act of 1964 Americans with Disabilities Act of 1990 Independent Contractor Compensation paid per job Not eligible for unemployment compensation Discrimination protection limited

Employee v. Independent Contractor Characteristics

Ramifications of Mischaracterizing Liability Rule of thumb: Contract with independent contractors to make the relationship clear to a potential third party. Taxation Rule of Thumb: When in doubt characterize the worker as an employee. Employment Discrimination Rule of Thumb: Do not engage in discriminatory practices. Unemployment Compensation Rule of Thumb: When in doubt characterize the worker as an employee.