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Today’s topic is “Solopreneur. Am I actually an employee?” I talk with Jeffrey Cochran, SPHR, a Human
Resource consultant with HR Perspective and Recruiting (https://www.hrperspectives.org/), addressing regulatory compliance and employee satisfaction.
- Legally, a solopreneur may work as a sole proprietor, LLC, or LLP
- Problems arise when other entities, e.g., the IRS (tax dollars) or Labor Department (Fair Labor Standards Act (FLSA)), don’t recognize their legal status and categorize them differently.
- IRS looks at relationship between individual and consulting client from 3 areas, Common Law Rules
- Type of Relationship (contractual agreement)
- Behavioral control over individual (work hours, work space, work flow)
- Financial control over individual (who’s paying for process, tools, weekly check, etc.)
- The Department of Labor uses the FLSA to judge whether or not the individual is an independent contractor
- Economic Reality Test (20 points)
- Contractual Agreement with a scope of work
- Controls similar to the IRS criteria
- Work is invoiced
- Working with multiple clients
- Potential for both profit or loss
- States can decide an individual is am employee, e.g., California and Uber and Lyft drivers
- For those working in the gig economy these concerns are important to pay attention to
- More information can be gathered at the Department of Labor’s website (https://www.dol.gov/whd/regs/compliance/whdfs13.htm) as well as the IRS’s (https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee) web site
- How these issues arise and get the IRS’s and DOL’s attention.
- How to avoid these issues
- Future topics are discussed. Stay tuned!
Jeffrey can be reached at 614-565-8073 and firstname.lastname@example.org
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