By: Prince Stokley
Technology companies are some of the most unique and creative companies in the world. Technology companies are responsible for changing the way goods and services are delivered. However, due to the changing ways that goods and services are delivered so do the employees that work for these advanced companies. Some technology companies have independent contractors working to maintain their technology companies and other companies hire employees of their company. One might ask what is the big difference between these two classification of employees? There are major differences between these two types of workers. Worker misclassifications can lead to back pay, overtime, tax, unemployment insurance, and workers compensation violations as well as employee benefit plan eligibility and coverage errors. Ensuring that workers are properly classified is critical and employers must be aware of their work arrangements and benefits of its employees.
Businesses are required to pay social security benefits and workers compensation benefits for its employees. Some states and territories require businesses to provide partial wage replacement insurance coverage to their eligible employees for non-work related sickness or injury. Also, companies who have employees must adhere to the minimum wage and salary requirements for its employees. The company is required if it has over 50 employees to provide health insurance to its employees. If not the company faces potential fines for not providing its employees with health insurance. These laws surrounding employees and benefits that must be provided are often times very costly for companies. However, there are some incentives to be compliant with these laws as it may have legal and tax implications.
However, if a company hires an independent contractor the independent contractor is responsible for providing its own benefits and the employer does not have to provide any of those benefits. This is very crucial in deciding which classification a business gives a worker. What makes an independent contractor different from an employee anyway? An employer is often regarded as someone the employer sets a salary for, controls the time the employee comes to work, and controls the job duties that the employee performs.
An example of this is the current UBER trial that is currently still in litigation. This is a case about a technology company that helps to provide a software platform to drivers of cab like services. So a driver essentially takes their own vehicle, purchases the UBER software, goes through some training, and then pays a percentage of the amount of money the driver makes from driving people to their respective destinations. UBER treats the drivers as partners (independent contractors) and not employees as they have argued before the court that they don’t control the type of work the driver makes or set a salary for the workers. However, UBER drivers have asserted that UBER not only provides the platform for the workers but they also set the salary for the drivers. Drivers have been petitioning all over the country and have started to make some successful ground. This trial is still in litigation but this is an example of how important it is to classify workers with the right classification. If it is determined that UBER’s drivers are actual employees this company will face very costly penalties such as back pay for benefits to its employees and benefits that are required for employees of those respective states.
It is important for technology companies who are very innovative to pay close attention to employment laws and make sure they classify workers correctly. Meanwhile we shall wait to see the pending litigation of UBER’s case to see if other technology companies will adhere to some of the laws that are ruled on this litigation.