This area of infrastructure deals with the relationships you have with the people who help you provide your services. They stand “behind” you and help you deliver your services to your clients. They could be doing administrative work, financial tasks, professional services, or any other type of work that needs to be done to make your business function.
Legally speaking there are so many rules that cover our relationships with workers – employment law is a huge body of federal and state laws, and that’s not to mention tax law. At The Legal Department, we divide the analysis up into two separate pieces:
(1) What type of structure is needed between you and your worker?
(2) What might we need to require from your workers in order to protect your clients?
As professional service providers, you must consider both aspects of this relationship. And most of the time, it will require some sort of written contract to cover it.
What is the difference between an employee and an independent contractor (1099 worker)?
There are so many differences and the distinction between the two is very important. Sometimes a business owner will prefer to classify a worker as an independent contractor instead of an employee. This decision can be a big danger and have significant monetary consequences if it is not done right. The explanation of the differences between the two classifications is too complicated to answer in this space, but we have several blog posts on this topic that go into further detail.
Do I need written contracts with my independent contractors (1099 workers)?
Since Florida is an at-will employment state, the decision to have a written contract with your employees is a strategic one. If it’s not done right, it can override the at-will employment designation. So the analysis involves whether there is a benefit to having an employment agreement. For most service professionals, there are many benefits to having a written contract with your employees. One of the main reasons is to protect your clients. As service professionals, we are often in possession of sensitive client information and we must require our employees to treat it with care. In addition, after an employee leaves our employment, we may want to control if and how they may have contact with our clients. Often, it is a matter of protecting our license, our reputation and our business success.
Do I need written contracts with my (1099 workers)?
The answer is a definite yes. Besides the reasons we outlined in the question above, you need a written contract to define the contractor relationship. It is helpful for you and the worker to understand what is required and how the relationship will function. But it is also helpful in case the government wants to know whether this relationship is categorized correctly. The government will not take the contract at face value, so it is important that you have a written contract AND that you follow it in practice.
When should I use an HR consultant and when should I hire an attorney?
We get this one a lot. The answer to this may vary depending on which attorney you talk to, but for us at The Legal Department, the answer is simple. You need an attorney when you have to draft a contract. HR consultants cannot help you draft a contract that fits your situation – they can give you a one-size-fits-all form but they cannot tell you how to customize it. That is the practice of law. We work hand-in-hand with qualified HR consultants and know that they can provide great benefit to our clients in the right areas.