In terms of Business, an Individual who offers services to another in exchange of remunerations as fee is considered as an employee or independent contractor. An employee performs all the tasks in his ability but limited to a specific organization and is controlled by that organization. The organization monitors an employee’s work, sets a timetable according to his responsibilities and determines the technique the employee uses to perform his work. An independent contractor, on the other hand provides services to organization but not limited to one at a time,he works for himself.
It is quintessential for a company to review its employment practices. It helps in shaping the goals and objectives and further that what steps exactly one need to take into account while taking care of the organizations budgets. There are a few facts which are critical to determine. One should know, whether the all employees or independent contractor are paid off the least minimum wages. In an organization workers should be classified properly. One shall make sure is they have an independent contractor; they should meet the test for that status and each employee must be classified based on his duties and tasks.
Reviewing practices focuses on the requirements of some of the major employment-related laws. As per law, an employee and employer both can be defined under term Independent Contractor. In an organization it is essential for an employer to determine properly each individual’s work status because HR practices or law treats employees and independent contractors differently. Because it is not necessary to provide certain employment benefits to independent contractors or deduce income taxes from their salaries. Independent Contractor is not entitled too many of the protections as those extended to employees. For instance minimum wage, overtime, and meal and rest break laws do not apply to independent contractors and this varies from state to state. So it is critical that an organization or business owners correctly determine whether the individuals providing services to organizations are employees or independent contractors.
According to common law rules, the degree of control and independence in an organization and help to differentiate an employee from an independent contractor is derived by three factors. First one is Behavioral: It depends on the rights which an organization has in order to control what an employee does and how he/she performs his or her job. Second is Financial: This category includes things like how an employee is paid and business aspects of worker’s job which is controlled by payer. Third and last one is Type of Relationships: This category helps to determine written contracts and employee benefits for example pension plans, insurance and vacation pay, severance pay etc. An organization or a business must take care of all these three categories or factors while determining whether a worker is an independent contractor or an employee. With the help of these factors all workers can be classified properly, as some factors may show that worker is an employee whiles other factors show that worker is an independent contractor.
The ultimate goal of reviewing practices is to help an organization in identifying potential problems, calling for necessary solutions, improving performance and following law and rules which help to maintain company’s norms and revenues. If you would like to have more information, have a look on http://www.cornerstonehradvantage.com/
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