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Writting Up subcontractors

Is there a law about issuing a written warning to Subcontractors? If I write them up for not following outline terms of their agreement does that consider them employees and require me to treat them as such?

There is no law that prohibits an employer from issuing disciplinary actions to subcontractors. However, there may be implications in doing so.

The IRS has established standards that help employers determine if an individual is an employee or independent contractor. It’s important that employers correctly classify workers so the appropriate taxes can be withheld and for applications of the Fair Labor Standards Act (FLSA). Misclassification can result in costly fines and penalties.

The IRS provides a 20 Factor Checklist for determining the appropriate classification. By issuing a written warning to the contractor or disciplining the contractor in the same manner as employees are disciplined questions the worker’s “subject to direction”. When the individual is subject to the direction and control of the employer, meaning the employer exhibits significant control over the worker’s performance, the relationship is employer-employee.

If you’re certain that the worker(s) is clearly an independent contractor then consider addressing the infractions in a different manner other than by issuing a written warning. Depending upon the severity of the issue, consider verbally discussing your concerns with the contractor. Inform him that the terms of your agreement are not being followed and be clear on your expectations going forward. Feel free to make a personal note for yourself regarding the matter. If the issue is severe enough, you may consider terminating the relationship/ending the contract. Remember to review the actual contract regarding early termination to be clear on what your responsibilities may be.


This entry was posted on Tuesday, January 20th, 2015 at 2:36 pm and is filed under
Human Resources Management, Performance Management.
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