Many employers would prefer to consider their workers to be
“independent contractors” rather than “employees.” Using independent
contractors reduces payroll taxes and tax reporting requirements, provides some
measure of insulation from potential liability, and eliminates the need to
provide employee benefits. However, you should be very careful; simply calling
someone an “independent contractor” will not protect you from potential
liability.
With increasing frequency, employers have found themselves
on the wrong end of an investigation by state or federal agencies which
determined that their workers do not meet the legal test to be considered
independent contractors. Those employers must pay back taxes, penalties, and
interest related to their newly-designated employees.
There is a test with about twenty (20) factors used by the
government and Texas courts when determining whether someone is an independent
contractor. It’s a very fact-specific analysis, in other words – it depends on
each individual situation. But in general, a true “independent contractor”
works independently of the employer’s control, and is usually able to work for
more than one employer at any given time. If you dictate when, where and how
the work is to be performed, you set the hours of work, you require full-time devotion
to your business, and the worker has no ability to work for others in the same
field of competition, you probably have an “employee.”
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