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TJ, Esq.
TJ, Esq., Attorney
Category: Business Law
Satisfied Customers: 11651
Experience:  JD, MBA
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I have a business where I do not have a schedule . We train

Customer Question

I have a business where I do not have a schedule for employees. We train them on ONE task and then from there it is their responsibility to ask co workers that have knowledge of other tasks to train them. They are paid for the training of the first task only and then any other training of any other task they are not working and they are not getting paid. They volunteer to come in to learn so that they have the knowledge to work more hours.
Am I able to pay them as contractors and not do employment taxes in this situation?
This is in Texas and my business has about 15 employees.
Submitted: 5 months ago.
Category: Business Law
Expert:  TJ, Esq. replied 5 months ago.

Hello and thank you for the opportunity to assist you. My name is ***** ***** I will do my very best to answer your legal questions.

This sort of thing is determined on a case by case basis, and the most important factor is the amount of control that you exercise over the workers. For example, if you give the workers a goal, and they reach the goal in the way they best determine, then that indicates that they are independent contractors. But if you direct how your employees reach the goal, then that indicates that they are employees instead.

Having said that, with the little information that you provided, and given that there is no schedule on when to work, it sounds like you exercise very little control over the workers. Accordingly, it sounds like they could be classified as contractors rather than employees.

Does that answer your question? Please let me know if you need clarification, as I am happy to continue helping you until you are satisfied.

Customer: replied 5 months ago.

All I do is define an end goal. They determine how to get there the fastest way possible and their pay fluctuates based on their production numbers.

What we do: retail online sales of used auto parts. So the 'production' employees:

count the parts

clean the parts

take photos of the parts

and there are a few similar production tasks that are all numbers related

then there are some overhead or 'support' employees and I also do not define their full process. Most employees take the route they see as the best to get to the end goal.

What more information do you need to be able to help further. This would be too big of an oops for me mess up on.

and can I switch current payroll employees over to contractor status once I figure out all the ins and outs of this?

Expert:  TJ, Esq. replied 5 months ago.

Hi again.

Based on what you wrote, it sounds like they can be properly regarded as contractors. Here is what the IRS says about it:

Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Yes, you can switch employees to contractor status if they agree to it.

Expert:  TJ, Esq. replied 5 months ago.

If you intend to make important business decisions on this topic, then my suggestion is to retain a local attorney to review the details of the situation, as that person will then be able to make an informed opinion. All I can do is give you my opinion based upon what you write here, and that may not have scratched the surface so far as individual positions and workers.

Expert:  TJ, Esq. replied 5 months ago.

Hello again. I didn't hear back from you, so I'm just checking in to make sure that you don't need more help on this issue. If not, then please remember to provide a positive rating to close out this question (and please remember that your positive rating is the only way that I'll get credit for helping you, so I greatly appreciate it). Thank you!

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