What is an Independent Contractor Lawyer
An independent contractor lawyer is simply a lawyer who specializes in the use of independent contractors. While many different types of lawyers may have to work with independent contractors, employment lawyers, construction lawyers and real estate lawyers are more likely to have to deal with independent contractors.
Independent contractor lawyers help to ensure compliance with the IRS requirements for independent contractors and state and local laws that might apply to them . Each independent contractor lawyer has an area of law that they generally may focus on. For example, some may focus on real estate transactions, while others focus on construction law or other contractor issues. An experienced independent contractor lawyer should have detailed knowledge about how the independent contractor laws in their jurisdiction apply to contractors. It is their job to also make sure that contractors are in compliance with those laws and to represent them in court if there is a dispute.
The Advantages of Hiring an Independent Contractor Lawyer
One of the most expensive things a business owner can do is be careless when classifying its relationship with some of its workers. Whether an individual can be classified as being an independent contractor or an employee can be a complicated determination. Classifying someone as an independent contractor but treating them like an employee may be a tempting strategy for some entrepreneurs, especially those running passive and online businesses, because it allows them to avoid paying employee taxes. However, if employment authorities decide that a worker has actually been misclassified, the employer will be forced to pay the former employee’s taxes out of its own pocket. That’s in addition to paying penalties to the government agencies that supervised the worker. Aggravating the situation dramatically, the federal and state governments even have the right to seize the employer’s property to satisfy these debts. Meanwhile, the affected worker has a right to collect from the employer any wages that were withheld because he or she was not classified as an employee.
Even more time consuming (and discouraging) than these enforcement actions can be defending against a lawsuit initiated by the affected employee. This is true because this worker may well be able to obtain statutory damages against the employer, which can far exceed any actual wages lost by the employee. The risk of such a lawsuit is increased by the fact that many employees file claims without first going through the appropriate regulatory process, wherein they pursue an administrative resolution. Because this can make litigation inevitable, it’s important for any business to ensure it is poised to defend itself against a potential claim.
Every business should have an independent contractor lawyer on call to advise them on many topics. As stated above, misclassifying workers can be far more expensive than hiring them as employees. Hiring an attorney can avoid these mistakes from happening in the first place. If a business has more than one independent contractor, then it’s also possible that it will have more than one contract; thus, every contract should be treated as a legal document. An independent contractor lawyer can help on that front by drafting a legally sound contract for the business. Even if the contract is mostly sound, contracting without legal assistance could potentially leave a business exposed to a lawsuit in the future.
Typical Matters Managed by Independent Contractor Lawyers
Within any organization, there are bound to be disputes on a number of levels. There may be issues between employees and their employer. There may also be disputes between contractors and the company that hires them. Other conflicts might arise between two or more contractors sharing space or infrastructure within the company. Because of the nature of employment relationships and the rules of independent contractor relationships, issues may arise due to misclassification. Employees are guaranteed certain rights under federal and state laws. Independent Contractors do not have those rights. The following are some of the most common disputes that may arise, and where a lawyer’s assistance is valuable.
Employee vs. Independent Contractor- A business might wrongfully classify someone as an independent contractor when they should be an employee, under federal and state law. Typically with an employee, they are subject to a great deal of control and supervision by the employer. An independent contractor is largely free from this degree of control, and they are permitted to utilize their business name, operate out of their own facility, and provide services to multiple people simultaneously. Sometimes, a company will classify their workers as independent contractors in order to save on payroll taxes, or avoid liability for overtime. This is a major issue to resolve, and the worker will need a lawyer to assist on the matter.
Breach of Contract- Some independent contractors are hired pursuant to a contract, while others come to agreements without signing anything. If the parties have a contract, and one side manages to materially breach the contract, the other party is entitled to damages. The lawyer will review any contracts between the parties to assess what has been breached, and how it is remedied.
Unpaid Wages- Many independent contractors find themselves waiting weeks or months to get paid. While that might not be an issue if a project is still ongoing, an unpaid invoice can cause serious cash flow issues. Some independent contractors get paid a retainer fee, and the money is supposed to be released to them as work is performed. Doing work for free can be a frustrating experience for an independent contractor.
Medical and Disability Benefits- Independent contractors do not qualify for health insurance in the same way that employees do. Family plans are available, but require the independent contractor to pay out a much, higher contribution. In addition to this, Disability Insurance is more complicated for independent contractors. If a contractor gets injured or becomes ill, and cannot continue working, they expect to be compensated. When this does not happen, they need help from a lawyer.
Selecting the Most Suitable Independent Contractor Lawyer
When choosing an independent contractor lawyer, it is crucial to select someone with the relevant knowledge in independent contractor misclassification law and a proven history of positive results. Experience is of course important, but so is specialization in the specific article 207 independent contractor misclassification exemptions; there are many kinds of independent contractor work out there and depending on the particular situation different exemptions to the federal and state employment law may apply .
Equally important is reputation, which may be subject to bias in the media, the general opinion of others in the industry, or based on word of mouth referrals. A simple check of the Better Business Bureau could be a good place to start.
Lastly, client reviews that offer some indication of the independent contractor lawyers skill set and the possible experience you can expect from your lawyer.
The Fee Involved in Employing an Independent Contractor Lawyer
The cost of hiring an independent contractor lawyer to handle your legal issues may vary widely depending upon the area of law, the size of the firm, the geographic location and experience level of the lawyer. Independent contractor lawyers typically charge their clients on an hourly basis, so it’s important to discuss the fee structure with the contractor lawyer before he or she begins work for you. Typical hourly rates range from $100-300 per hour. In addition, the contractor lawyer may ask for a retainer, which is a pre-payment of services that will be billed against as services are rendered. A retainer may not be required if your matter is expected to take a few hours, as this is usually manageable through a current retainer account. The payment system must be fully understood before engagement.
Keep in mind that in addition to an hourly fee and/or retainer, the independent contractor lawyer will pass on to you any and all expenses including but not limited to court filing fees, filing fees for interrogatories or other pleadings, filing fees for motions, fees for recording documents with local, state or federal agencies and for paying filing and recording fees outside of the local jurisdiction, costs for making copies, obtaining documents and certificates required by law and for printing documents, etc. You can end up spending thousands of dollars on court records, certified copies of records, according to the statutory requirements, and filing fees. If you are hiring the contractor lawyer to negotiate a deal, such a different fee may be charged. The contractor lawyer also bills for time on the telephone, with clients and others, and forwards those charges to you as well. You will be asked to give a credit card deposit and/or a retainer to prepay the lawyer’s services before he or she will agree to represent you.
The Future of Independent Contractor and Legal Services
The landscape for independent contracting continues to evolve at a fast pace. The emergence of the so called "gig economy" has resulted in a new breed of technological intermediary, connecting independent contractors with businesses for both short- and long-term projects. Also driving the growth of independent contracting is the increasing use of freelance personnel by businesses of all sizes in response to the growing regulatory burden tied to the ACA, FLSA, and other regulations. As benefits-based funding of the gig economy fades as a contributor to independent contractor growth , companies are actively seeking new solutions for managing the costs and risks that come with independent contracting. In fact, more companies than ever are using independent contractor management companies ("ICMCs") to manage their independent contractors. But the ICMC approach is limited in its ability to control costs and manage risk. Existing publications suggest that more companies are expected to turn to the ICMC approach in the coming years. Whatever solution businesses settle on, it will eventually lead to increased demand for independent contractor legal expertise.