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Independent Contractors

Don’t Treat Your Employees Like Strippers

By Business Contracts, Business Lawyer

employees independent contractorsAs reported by Jessica Anderson in the Baltimore Sun (Strip club dancers are suing clubs over pay – and winning), strip clubs are getting in trouble by improperly treating strippers as independent contractors instead of as employees.

Although there’s no hard and fast rule as to whether an individual working for your company is an employee or an independent contractor, the U.S. Internal Revenue Service (IRS) does provide some guidance on the issue.

Important Employment Factors

Two key factors that favor employment status are setting the work schedule and controlling how the work must be done by the person. For strip clubs, this meant club management telling the dancers when they had to perform and dictating what they could and couldn’t do when stripping/dancing.

What’s the potential damage by mislabeling employees?

If you treat your employees as independent contractors, you may be liable for back wages, statutory damages, penalties, employment taxes, plus contributions to workers compensation and unemployment compensation funds. These misclassified employees may also be eligible for benefits you’ve provided to your other workers, such as 401k contributions, paid vacation, and health insurance.

How to this problem?

If your workers are really employees, treat them as such from the time you extend an offer to work for you. Pretending they’re independent contractors when they’re not creates a ticking time bomb of legal and tax liabilities you don’t want.

On the other hand, if a worker truly is an independent contractor, it’s often a good idea to make that relationship clear in a professionally prepared written independent contractor agreement signed by the parties. If the contractor decides to assert employment status, you’ve got a contract to point to when trying to convince a judge or government agency that the worker is not an employee.

IRS Form SS-8

If it’s truly unclear whether your workers are employees or independent contractors after consulting with an experienced business lawyer, you may wish to file a Form SS-8 “Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding” (PDF file) with the IRS for a determination as to the workers’ status.

Outsourcing: Do you make these 5 deadly mistakes?

By Internet Lawyer

Outsourcing is one of the best ways for Internet entrepreneurs to grow their businesses. If you’ve got plenty of good ideas for new products and services but not enough time in the day to implement, you either need to hire employees which cost a lot — often more than than they’re worth — or outsource the work as projects to independent contractors. When you outsource with work-for-hire contracting, you can focus on growing your business instead of  getting trapped in the day-to-day details.

Over the years, I’ve seen entrepreneurs make some fundamental legal mistakes when outsourcing. These mistakes cost time and money to fix. And sometimes they can’t be fixed because the business was destroyed.

Although I’ve been able to help clients one-on-one avoid these outsourcing mistakes and profitably outsource work, there simply isn’t enough time in the day to personally do this for everyone. Even the attorneys who work with me don’t have enough time to meet the demand.

Because of this, I’ve decided to identify the 5 biggest mistakes that you can make when outsourcing and show you how to avoid them. Simply click this link right now to learn more.

Outsourcing: Do Your Independent Contractors Get Paid Like Today’s James Bond?

By Internet Lawyer

With a license to kill, a hit team took out a Hamas terrorist leader while he was staying at a Dubai hotel. If he were alive today, Ian Fleming would probably have considered the hit as a plot for one of his James Bond novels.

As the hunt continues for the those who carried out the hit, it appears that the majority of the agents involved used Payoneer pre-paid credit cards.

I’ll confess. When outsourcing, I use and have recommended Payoneer for paying overseas independent contractors. They are a good solution for compensating those who do work for you when you can’t get the funds sent via PayPal.

However, like PayPal, Payoneer undoubtedly faces scrutiny because of the potential for abuse for money laundering, tax fraud, financing terrorism, and other illegal activities.

That being said, both companies are useful tools to have in your oursourcing arsenal. You can use them for good or bad purposes.

And if you’re using them to pay your independent contractors abroad, be sure you’ve got documentation on file regarding identity, etc. that will reduce the likelihood of spending time dealing with either the Internal Revenue Service or the Department of Homeland Security.

When in doubt, make an outsourcing paper trail showing what you’re doing is legal.

Outsourcing is just one of the many important issues covered in “Internet Marketing Legal Secrets Revealed,” my book that’s currently offered as a bonus for those who invest in Website Legal Forms Generator software.

Independent Contractor Agreements: Should You Use Them In Your Internet Business?

By Business Contracts, Business Lawyer

independent contractor agreements

Let’s make one thing clear…

Never Use Independent Contractor Agreements to Hide Employees

Independent contractor agreements should not be used in your Internet business to disguise an employer-employee relationship. However, like an employment agreement, it’s an important legal tool you’ll use to handle your labor needs.

If you get caught treating an actual employee as an independent contractor, you could be held liable for payroll taxes and some nasty penalties. There’s also the potential to deal with unemployment and worker’s compensation claims with an unhappy state government involved because you haven’t been paying the related employer contributions to those systems.

Related Article: How To Use An Independent Contractor Agreement

In other words, it’s simply not worth the risk.

When to Use Independent Contractor Agreements

If there truly is an independent contractor relationship, such as a work-for-hire web design gig for a single site, you’ll want a signed written independent contractor agreement in place to protect your legal rights.

Although the terms of the contract will vary depending upon the type of work to be performed and the unique circumstances surrounding the relationship, there are some general provisions that most of these types of agreements have in them in order to be binding (legally enforceable) in a way that offers you protection.

Related Article: Non-Compete Agreement And Independent Contractors

These terms include:

  • Scope of work
  • Price (amount and time(s) of payment)
  • Expense allocation (including any reimbursements)
  • Deadline for completion
  • Milestones (often tied to payment)
  • Existence of an independent contractor relationship rather than employment
  • Ownership of intellectual property rights for work created and protection of trade secrets
  • Governing law and jurisdiction
  • Alternative dispute resolution provisions

How to Get Independent Contractor Agreements

Of course, an experienced Internet lawyer can draft customized independent contractor provisions that are designed to protect your interests while keeping you out of court in case of  a dispute. If you’d like to talk with Business Contracts Lawyer Mike Young about getting an independent contractor agreement, be sure to set up a telephone consultation.

Confidentiality Agreements: How To Use Them In Your Internet Business

By Internet Lawyer

confidentiality-agreementWhen you’re dealing with trade secrets and other sensitive Internet business information, you’re going to want your employees and independent contractors to sign binding confidentiality agreements. This type of contract, also known as a nondisclosure agreement (NDA), is used to identify what information you’re sharing constitutes confidential information, the other party to the agreement acknowledges that he will not be disclosing the information to anyone, and the agreement provides you with legal remedies in case the agreement is breached by unauthorized disclosure.

A confidentiality agreement can be its own contract or it can be part of another agreement, such as a non-compete agreement or a client non-solicitation agreement. Whether you’ll incorporate it into another contract or have it as a separate agreement, the nondisclosure agreement is essential to protecting your e-commerce company’s important data.

Your Internet lawyer can help you determine the best way to protect your Internet business’ trade secrets.