Employee or Independent Contractor

February 8, 2024

Employee or Freelancer? New Rules for Independent Contractors

Employee or Freelancer?

Is a person who works for your business financially dependent on you, or can they potentially independently profit based on their skill set? Will they be part of your company indefinitely? Do they perform a central, daily, integral role? Do you dictate when, where and how they work? Do you limit their ability to work for others? Can the person apply what they do to other endeavors, widening their market reach and leading to other revenue streams?

Small businesses and other employers will need ask themselves this set of questions and consider the “totality of the circumstances” in determining whether to classify people who work for them as employees or independent contractors, in a rule change published by the U.S. Department of Labor’s Wage and Hour Division on January 10, set to take effect March 11.

February 1, 2022

‘Independent Contractor’ Might Be a Trojan Horse

by George Bellas

Independent Contractors

A recent Illinois Court of Appeals decision in an Illinois Wage Claim Act case puts a magnifying glass on the sticky wicket employers can find themselves when they are unable to pay an outside contractor, at least under certain circumstances.

The decision in O’Malley v. Udo, 2022 IL App (1^st) 200007 (Jan. 14, 2022) revolved around an independent contractor who was paid $1,000 per work day plus expenses, was sent 1099 forms at the end of the tax year, was mostly free to work from his Evanston home, and otherwise clearly identified in the written agreement between the parties – and at his insistence – as a consultant.

January 24, 2019

Employee Expense Reimbursement Now Mandatory in Illinois

by George Bellas

Employee expense reimbursement is now required by law in Illinois, at least under certain circumstances, making the Land of Lincoln the ninth U.S. jurisdiction to statutorily impose such a requirement. In doing so, Illinois joins the company of other states with similar rules. Employers of all shapes and sizes should get up to speed on the new law, an amendment to the Illinois Wage Payment Collection Act that took effect on January 1, which requires employers to reimburse all “necessary expenditures” directly related to the employer’s services.

The new law (820 ILCS 115/9.5) defines “necessary” as “all reasonable expenditures … required of the employee in the discharge of employment duties and that inure to the primary benefit of the employer.” This means that the employer must have either “authorized or required” the employee to purchase the product or service and must receive appropriate documentation within 30 days—unless the employer allows for a longer time frame.

Employers should have written expense reimbursement policies that lay out what they pay for and how much, along with what’s requested in terms of documentation; although if an employee cannot produce this documentation, such as a receipt, the employer must accept a “signed statement” from the employee instead. This written policy can set caps for different categories of expenses and the employer does not need to reimburse more than the capped amount, provided the caps amount to more than “de minimis” reimbursement—a term the amendment does not define. In other words, the best guideline one can follow is: be reasonable, based on costs in your area.

October 23, 2018

Independent Contractor or Employee?

by George Bellas

Workers Classification – Employees or Independent Contractors

Independent Contractor or Employee?

As a business owner or an employer, when you hire a new worker, you will be reintroduced to the question – should you classify the worker as an employee or an independent contractor? In order to make this huge business decision, you need to fully understand the difference between an employee and an independent contractor and the importance of classifying them correctly.