We know that it can be tempting to classify seasonal, temporary, or part time helpers as independent contractors, and that they might even ask to be put on a 1099. But, the government doesn’t care how they wanted to be classified—and if one of them files an unemployment claim and lists you as a previous employer or files a lawsuit with the Labor Commissioner, you could end up paying for it. Here are the top ways to tell if your contractors are really employees:
1.) They use your equipment. Unless they have their own computer, tools, sewing machine, etc., they’re probably not independent contractors.
2.) They come in to work on a set schedule. Unless they make their own hours and work when and where they want to work, they’re probably not independent contractors.
3.) You pay them by the hour. Independent contractors are general paid on a project basis. If you are paying yours by the hour, they’re probably not independent contractors.
4.) They are essential to your regular business. If you are in the business of selling pie, and the independent contractor bakes pies for you, they are your employee.
This is a complex issue and you’ll want to speak with an employment lawyer for advice specific to your business, but those are the basic telltale signs you have employees, not independent contractors. If you do want to hire people who are part time, seasonal, or temporary, here’s what we suggest:
• Put them on your payroll. Depending on what type of payroll service you use, this shouldn’t cost much, and will protect you from a legal misclassification claim. You are NOT required to give employees on your payroll a set number of hours per week or per month—if someone works for you for four days a year, you pay them for 4 days of work, that’s it.
• Use a temp agency. Temp agencies can recruit candidates for you, and can replace them quickly if someone doesn’t work out. They typically charge about 40% on top of the hourly rate in light manufacturing settings, which covers workers comp insurance.
If you are mis-classifying people every year during the high season, this could put your business at risk over the long term. If you have questions or want to meet with one of SFMade’s advisors, please email Claire Michaels, Manufacturing Workforce and Hiring Manager at [email protected].