Afoul of Independent Contractor Rules: Training

As a project manager you may have to work with what the law calls "independent contractors." In recent years employers  - and their attorneys - have been wrestling with the issue of who is actually an independent contractor and who is not. This so ironic because there has been plenty of time to sort this all out. You see years ago there was the famous "perma-temps" case where a well-known IT employer appeared to be hiring contractors in order to - you won't believe this - save money by not having to pay full-time employee benefits and other costs. The employer described certain employees as independent "temps."

The point of the court judgement was that the employer did not treat these contractors any differently than full time employees. The conclusion was that there had to be a difference and the IRS was nice enough to codify a list of factors so that employers could identify both groups appropriately.  

It looked good on paper.   

In practice, however, it has been more complicated.  I've worked as an independent contractor and an employer of independent contractors  and I can tell you first hand that it is a difficult relationship to manage even with the rules and guidance. 

This will be the first of a continuing intermittent series on these rules and how you can take practical steps to avoid non-compliance. The approach will be pragmatic, and you will want to make sure you work with your legal and compliance experts to ensure you do right by your organization.   

According to the IRS:  "The general rule is that an individual is an independent contractor if  the payer has the right to control or direct only the result of the work  and not what will be done and how it will be done." 

To start us off on an easy note, we can look at the rule on training.  It says that if you train workers, they are employees not independent contractors.  

Wait, what? Do you mean we cannot train our contractors at all?  What if we simply train them on our software development lifecycle and our tollgate set-up? What if we just give them compliance or security training? 

Did I say start on an easy note? I lied. There are no easy interpretations. Now you see where confusion can come in for any of the criteria.  We'll apply several rules against this training scenario in my next post. 

Until then, make sure your independent contractors clearly label themselves as such in their standard email signatures.