Employee vs. Independent Contractor

Benefits and Risks of Using Independent Contractors

Many employers don't think twice about hiring Independent Contractors.  It can cost less because you don't have to pay employment taxes and various other employee expenses.  Perhaps most importantly, however, hiring Independent Contractors gives companies greater flexibility in expanding and contracting the workforce.  An Independent Contractor  can be hired to accomplish  a specific task and then released, enabling a business to obtain specialized expertise for a short period.  Employers can avoid the trauma and potential severance costs and lawsuits brought on by laying off or firing an employee.  An experienced Independent Contractor can usually be productive immediately, eliminating the time and expense involved in training employees. 

There is no single test used to determine if workers qualify as Independent Contractors.  Companies are at risk of having the status of employees classified as Independent Contractors audited by the IRS or other government agencies if one of their Indepentent Contractors:

• Files a claim for unemployment (State Unemployment Agency)
• Files a claim for workers’ compensation (State Workers’ Compensation Agency)
• Files a claim for discrimination (Equal Opportunity Commission)
• Claims he/she is really one of your employees (US Department of Labor)
• Hasn’t been paying taxes (IRS)

The only way to successfully wade through this legal thicket is to spend some time and effort learning how these government agencies go about classifying workers.  Don’t leave yourself vulnerable to government auditors who like nothing better than to reclassify Independent Contractors as employees and impose assessments, penalties and fines.  With SCA's services, you'll be able to avoid the hassles of hiring, managing and paying Independent Contractors. We will work with you to eliminate the administrative burden and confusion . As the "Employer of Record" for your Independent Contractors, SCA will handle all associated contractual, payroll and administrative tasks

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