For many growing businesses, it makes far more sense to hire employees on a part-time or contract basis. Working with independent contractors instead of direct-hire employees can be much more cost effective.
As the employer, you don't have to worry about certain costs, such as employment taxes. In some cases, you may still have to obtain workers' compensation coverage for contractors, but you should have an attorney review your business model beforehand. Working with independent contractors allows you to grow your workforce as needed and end contracts when work and income is slow.
However, when you terminate or lay off an independent contractor, there is often a risk of backlash. Sometimes, workers who believe that they were inappropriately classified as a contractor instead of an employee may bring a civil lawsuit. These individuals are often looking for severance or other financial help to offset their sudden loss of income.
However, as an independent contractor, they are generally not entitled to severance. One of the best ways to protect your growing business from this form of reprisal is to have your independent contractor contract carefully reviewed by an experienced lawyer.
The right contract can protect your business
There are certainly a lot of "one size fits none" independent contractor contracts available online. These can be fought and may be thrown out by a court, which could cost your company a lot of money. A carefully constructed contract is specific, exact and legally binding. Generic language and vague non-compete agreements may not hold up in court or fully protect your company. In order for your contract to sufficiently protect your business' interests, it needs to address the specific position and your company's policies for issues such as the termination of the contract and future work.
It may save you money in the short-term to use a generic employment contract you find online when engaging with independent contractors. However, it can also cost you a lot in the long run. It makes much more sense to speak with an experienced attorney who understands federal and California employment laws. Employment laws are constantly changing, so you need the help of an attorney who has experience and also who keeps up-to-date on legal developments for businesses and employers in the state of California. Doing so is the best way to protect your business and its assets.
An attorney can defend your finances and reputation
A lawsuit by an unhappy former contractor can cost more than money. It can also damage your company's reputation with future employees, customers or other companies you do business with. Don't risk letting a frivolous lawsuit hurt your company's finances and reputation. As soon as you decide to hire independent contractors or freelancers, you should speak with an experienced California business and employment attorney to ensure you have a valid and sound contract.