Freelancing has been common in many industries for as long as most of us can remember. Nance is effectively a freelance arbitrator, attorney, educator, and mediator. She has clients, friends, and family members who are freelance editors, photographers, and writers. But what about domestic employees, such as elderly companions, home health aides, housekeepers, and nannies? Are they freelancers? Can they be paid as independent contractors and issued 1099-MISC forms, or is the “client” required to provide workers compensation (“WC”) and disability (“DB”) insurance? Is the client responsible for income tax withholdings, overtime pay, and payroll taxes? Could you be putting them at risk of penalties and lawsuits?
Technology and the “gig economy” have made the distinctions between employees and independent contractors difficult to identify, and no industry is immune. New York State has been penalizing even “microbusinesses” and “solopreneurs” for misclassifying workers, and the costs can be in the tens of thousands–even when you’ve made an honest mistake and there was no actual harm.
- A freelancer files a claim under the Freelance Isn’t Free Act (“FIFA”)
- Your independent contractor begins to work beyond the scope of the original project, quits, and files for unemployment insurance (“UI”) benefits, listing you as an employer
- Your outside sales representative is involved in an accident while going to or from a sales meeting
- You register for an employer identification number and hire an employee
- You incorporate your business or form a limited liability company (“LLC”) and run your first payroll, even if you only pay yourself
We encourage you to schedule a Consultation with us (or an attorney with experience defending Worker Misclassification issues) to discuss your risks, before you hire any individual worker who does not own and operate a business that provides the same service you are hiring them to provide. You are at especially high risk of having individuals deemed your employees.
For more guidance on this topic, see the below blog posts:
- Six Things You Must Know Before You Hire Your First Workers
- Four Things You Need to Know About Worker Classification
- FAQ: What happens if the Board finds me liable, but I don’t have WC insurance?
- Nine Reasons Not to Hire Undocumented Workers
- Five Issues the NYS WCB Doesn’t Care About in the Claim Against You
NOTE: This page and website contain attorney advertising and a general overview of employment conflicts that might arise when freelancing or hiring freelancers. It is not legal advice. If you require information or advice applied to your unique situation, please make an appointment to discuss it with an attorney experienced with the subject matter. Don’t rely solely on what you read on the Internet. Ever.