Avoid the Independent Contractor Trap

September 3, 2010

Most businesses use independent contractors either on a regular basis or from time to time. Operating as if a person or entity is an independent contractor; then discovering the state employment security commission, the state department of Labor or the Internal Revenue Service considers the person an employee can be disastrous. Past due worker’s compensation insurance premiums, past due taxes and additional liability can be substantial. Below is some practical information to assist you in maintaining solid independent contractor relationships:

  1. Use written agreements to document the relationship. The written agreement can be a powerful source of documentation of the independent nature of the relationship. As a result, it’s critical the written agreement is drafted to operate as proof of an independent contractor relationship.
  2. Use an Affidavit of Independent Contractor Status. This document is often considered by insurance companies to determine whether to require worker’s compensation insurance.
  3. File the appropriate tax documentation (federal and state).
  4. Be certain that it is the independent contractor that determines the manner and means to accomplish the task. You can retain control of the outcome or final product.
  5. Require the independent contractor to provide you with invoices prior to payment.

Shawn Roberts

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I write about and try to answer practical Oklahoma legal questions. I tend to focus on estate planning and business issues. I make a living as an attorney working for Resolution Legal Group in Oklahoma City. I am husband to Amy and the father of Sam and David. We live exactly in the path where the "wind comes sweeping down the plains."

7 responses to Avoid the Independent Contractor Trap

  1. Your information is helpful. We almost hired one this past year and wish we would have known then what you have posted. Good information.

  2. Great information, Shawn. Got me thinking about a few things.

Trackbacks and Pingbacks:

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