Business Docx: Employees and Independent Contractors
EMPLOYEES AND INDEPENDENT CONTRACTORS
INDEPENDENT CONTRACTOR AGREEMENT
Few issues get companies in trouble faster with the IRS than improperly structuring relationships with independent contractors. We have provided a model independent contractor agreement that should be carefully tailored to your client’s business needs. We have also included a checklist provided by the IRS to help your client both understand the issues involved with independent contractor relationships and to help you understand the legal implications of terms and conditions your client places on the independent contractor.
If the relationship is improperly structured, someone your client believes is serving the company as an independent contractor may be deemed by the IRS to be an employee, triggering withholding and other tax liabilities and subjecting the company to broader employment laws that the client had not intended.
Clear employment agreements are often overlooked in the regular operations of small businesses (and sometimes in large businesses). By serving your clients with proper documentation to govern the relationship between the company and its employees, you will better equip your clients to avoid confusion and potential lawsuits that arise when the employee/employer relationship is inadequately documented.
The employment agreement addresses important matters like the employee’s duty to the company, compensation terms, protection of the company’s trade secrets, and many other matters. The nature of the employee relationship varies dramatically from one business to the next, so expect to heavily edit the assembled document as necessary to tailor it to your client’s needs. Also, make sure you’re adequately informed on state law employment matters, and ensure that the provisions you include are compliant with applicable state law.
MUTUAL AGREEMENT TO ARBITRATE
Sometimes employee relationships don’t work out. Rather than send the employer and (former) employee into litigation to attempt to resolve an employment dispute, you can help equip your business owner client by preparing an arbitration agreement between the employee and the employer in the event of a separation. Like other employment agreements, the agreement to arbitrate should be coupled with consideration so it should generally be part of an initial hiring process.
Agreement to incentivize key employees to remain employed by a business, for a specified period of time, after an owner’s death. The Agreement sets forth the dates, amounts, and sources of payments to these key employees.
PERFORMANCE REVIEW AND PLANNING FORM
One of the most overlooked – but very important – operational functions of a company is properly documenting expectations for employees and creating objective metrics for tracking employee performance. Certainly each employer should tailor the measurements and standards to its own needs, but this document provides a proven starting point for companies to develop employee grooming and improvement processes. Few attorneys have tools like this to effectively help their business clients.
EMPLOYEE COUNSELING STATEMENT
From time to time employees fail to meet the performance standards the company has established. In those instances it is imperative that the employee be given clear information on how their performance fell short. Properly documenting employee performance issues is vital when it comes to determining performance-based compensation or when disciplinary action should be taken. Coupled with other employee relationship resources in BusinessDocx, the employee counseling statement may help protect your business clients from grievances by unhappy employees.