Perhaps it’s the season, or a barometer of an improving economy, but I’ve received a few inquiries from clients lately on the topic of hiring employees.  There are a lot of steps to take — some might say “hoops to jump” — but as with most legal matters, it’s better not to skate on thin ice, especially when jumping through hoops.  (Please excuse my excessive metaphorization!)  I just discovered this website that provides information on each step, in an exceptionally clear manner.  So rather than reproduce what they have there, I thought I’d post a link to the website here, and you can check it out for yourself:  http://www.business.gov/business-law/employment/hiring/first-employee.html

Some people may think, well, instead of going through all that rigamarole, I’ll just pay this person as an independent contractor.  In years past, that was the tactic many potential employers took in order to avoid paying the 7.65% tax on employee wages, as well as the attendant insurance benefits.  But the IRS frowns on that, and has come up with a list of criteria that help to determine if a person should be considered an employee or a contractor.  The criteria address control and direction, with people who are controlled and directed being more on the employee end of the scale, and those who exhibit more independence being on the contractor end of the scale.  So, for instance, if you have your own tools, if you make your own hours (at least as far as the work you do for the employing entity goes), if you work for other people as well as this employer, if you have a contract to perform the work, then you might be considered an independent contractor.  If you, the employer are not sure if someone is an employee or a contractor, you can ask the IRS to make that determination for you, by filing Form SS-8, which is available here:  http://www.irs.gov/pub/irs-pdf/fss8.pdf But be forewarned, it may take several months to get a determination on a worker’s status!