1. Brenton D. Soderstrum BrownWinick 666 Grand Avenue, Suite 2000 Des Moines, IA 50309-2510 Telephone: 515-242-2474 Facsimile: 515-323-8574 E-mail: soderstrum@brownwinick.com Employee or Independent Contractor?

2. Advantage to an Independent Contractor: From an employment perspective: 1.No government mandated or employer provided benefits. 2.No workers’ compensation. 3.Independent contractors use their own equipment and facilities. 4.No unions.

3. From a tax perspective: 1.No FICA or FUTA taxes. 2. Don’t withhold taxes. 3.Independent contractors pay SECA rather than FICA taxes. 4.No unemployment taxes.

4. Independent Contractor Checklist Page 1 of 5 1.Profit or Loss; 2.Investment; 3.Work for more than one firm; and 4.Services offered to general public. If “yes” to all four questions, probably an independent contractor

5. Page 2 of 5 5.Instructions 6.Training 7.Integration 8.Services rendered personally 9.Hiring assistants

6. Page 3 of 5 10.Continuing relationship 11.Work hours 12.Full-time work 13.Work done on premises 14.Sequence

7. Page 4 of 5 15.Reports 16.Pay schedules 17.Expenses 18.Tools and materials

8. Page 5 of 5 19.Right to fire 20.Worker’s right to quit If answered “yes” to questions five through twenty, the worker is probably an employee.

9. Payroll Fraud Prevention Act April 8, 2011

10. Would amend FLSA to include “non-employees” 1.Require employers to provide written notice to all employees and non-employees of their status and refer toDepartment of Labor website. 2.Impose $5,000 penalty for each misclassification. 3.Increase audits. 4.Increase referrals of violations.

11. Potential consequences of erroneous classification: 1.Liability for the federal or state taxes, interest, and penalties. 2.Individual and class-action lawsuits by allegedly misclassified workers. 3.Government, civil, and criminal actions. 4.Attorney fees, expert fees, and court costs. 5.Negative publicity.

12. Compliance Tips 1.Self audit. 2.Key factors. 3.Depending on results of audit, take steps.

13. Website: www.brownwinick.comwww.brownwinick.com Toll Free Phone Number: 1-888-282-3515 OFFICE LOCATIONS: 666 Grand Avenue, Suite 2000 Des Moines, Iowa 50309-2510 Telephone: (515) 242-2400 Facsimile: (515) 283-0231 616 Franklin Place Pella, Iowa 50219 Telephone: (641) 628-4513 Facsimile: (641) 628-8494 DISCLAIMER: No oral or written statement made by BrownWinick attorneys should be interpreted by the recipient as suggesting a need to obtain legal counsel from BrownWinick or any other firm, nor as suggesting a need to take legal action. Do not attempt to solve individual problems upon the basis of general information provided by any BrownWinick attorney, as slight changes in fact situations may cause a material change in legal result.