![]() We Are Family Group Home has recently lost a number of residents so it decides to lay off two case managers, Rosa and James. This transition to independent contractor would likely withstand any legal scrutiny. Kim sets herself up as a separate business and buys all necessary equipment, does the books for other businesses, has her own insurance, and does the monthly accounts receivable and payable using her own software but gets the monthly reports back to We Are Family as requested. Kim has mentioned her interest in setting up her own bookkeeping business and continuing to do the books for We Are Family. We Are Family Group Home has decided to lay off its bookkeeper Kim since it now uses a payroll service and it doesn’t have enough work to employ a bookkeeper full time. ![]() If the work is a core service of the nonprofit, it is less likely that the worker would have sufficient control over the work product to establish independent contractor status. If your nonprofit can direct or control only the result of the work done, and not the means and methods of accomplishing the result, then your worker might be appropriately established as an independent contractor. Your group home can incur significant liability if a worker is inappropriately designated an independent contractor – and it is typically the employer’s burden to prove that the worker is properly classified if there is a challenge.ĭifferent laws establish different tests and factors for defining whether a person is an independent contractor or an employee, but the main concern is who has the right to control or direct what and how work is to be done. ![]() What you need to watch out for is the possibility of a payroll tax audit or the potential for various benefit-related claims. It is possible to transition an employee to a contactor if the worker truly meets the legal tests for independent contractor status. What is the potential downside to making that change? If we did that, we wouldn’t have to pay for benefits and we’d have more flexibility - we could match our personnel to our workload. Our nonprofit group home has to downsize and as part of our reorganization we are considering changing some of our employees into independent contractors as a cost-saving measure. By Ellen Aldridge, Pamela Fyfe on March 5, 2009Ĭategories: HR and Employment Issues Topic Tags: Ask Rita| Insurance & Liability| Legal/Compliance| Taxes
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