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Chapter 4. Staffing Up > Independent Contractors - Pg. 108

Staffing Up 108 not to mention the natural sympathy between jurors and another working person. In some states, however, there are no rules of evidence to protect a party; furthermore, parties may lose the right to appeal an arbitrator's decision. See the Arbitration section in Chapter 6 for further discussion of this clause. Independent Contractors Everybody loves independent contractors. They can be cost saving because the company won't have to pay benefits, worker's compensation insurance, social security, Medicare, or unemployment tax. Using independent contractors can also help a company manage burn (monthly cash outflow) between projects. There are two major risks to manage when using independent contractors: · Preventing the contractor from being reclassified by the IRS as an employee (resulting in a major tax hit) · Assuring adequate control of intellectual property and proprietary information Successful Use of the Independent Contractor, Part One: Is the Worker an Employee or an Independent Contractor? The IRS uses two main principles in classifying workers: independent contractors will generally: · Have control over the outcome of the work and ownership of the tools to create it; AND · Offer and provide services to more than one company. A court determining a worker's status will apply a test looking to the following factors: