Contracts of Employment Prevent And Solve Employee Related Problems
Effective contracts of employment or employee contracts must be carefully crafted to manage the complex relationship between your company and those who will perform work for your organization. An well crafted employee contract will establish all aspects of employment including, but not limited to:
- Scope of Work to be Performed
- Leave and Sick Pay
- Performance Evaluation and Disciplinary Procedures
Your contracts of employment should be in complete harmony with other crucial corporate documents such as your policies and procedures and employee handbook.
Contracts of Employment versus an Independent Contractor
Is the worker going to serve your organization as an employee or independent contractor? Many existing businesses have structured independent contractor relationships based on past rules relating to the provision of tools and supplies, work scheduling and other guidelines. The state of California and the IRS are looking for new ways to increase tax exposure and collections. Many employment situations that were previously considered by most parties to be “independent contractor” relationships have been re-classified by California and the IRS, resulting in large sums of back taxes and penalties. The attorneys at Janathan L. Allen, APC and the business advisors at Allen Barron, Inc. work to keep their clients well informed in new developments relating to California taxation authorities and the IRS.
The Misclassification of independent contractors has become a major issue for many California businesses in the past few years.
How will they identify your company for independent contractor misclassification? The first question asked in an EDD audit is usually “do you have any 1099 workers?” Separation is another trigger for agency entanglement and audits.
When an independent contractor’s job ends and he or she applies for unemployment, California’s Employment Development department can take that as a sign, and the company that hired him or her can be in trouble if he or she is deemed to actually be an employee. The state of California is currently auditing many companies, reclassifying former contractors as employees and charging employers for the contractor’s back income tax and other taxes, plus penalties for a four year look back period. This in turn can lead to the federal government entering the picture and collecting on Medicare and other obligations.
As with other tax and employment matters, poor planning now can lead to a world of trouble later. The business and tax attorneys of Janathan L. Allen, APC can help you address problems — and prevent problems related to employee contracts. We have extensive experience with state, federal and international legal and tax matters which affect business work relationship.
Protect Your Company with Well Crafted Contracts of Employment
Learn more about the necessary ingredients for your company’s contracts of employment to provide necessary protections while guiding the relationship between your business and its employees and/or independent contractors.
We invite you to contact Allen Barron or call 866-631-3470 for a free consultation to learn more or schedule an appointment.