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Classifying Workers as Employees vs. Independent Contractors Under Idaho Law: Part I

An issue that may be confound Idaho employers is determining whether a worker is an employee or an independent contractor.  For the reasons discussed below, some employers may be tempted to classify a worker as an independent contractor even though they meet the criteria for an employee, but the legal penalties for misclassification can be severe and should be avoided.

Under both federal and Idaho law, an employer must correctly classify a worker as an employee or an independent contractor. Idaho Code Title 72, defines “employee” as any person who has entered into the employment of, or who works under contract or service or apprenticeship with, an employer.  An “independent contractor” is “any person who renders service for a specified recompense for a specified result, under the right to control or actual control of his principal as to the result of his work only and not as to the means by which such result is accomplished.”

If you find this a bit confusing, you are not alone.  In essence, employees work under the direction and control of an employer.  They work specific days and hours, and there are procedures established by the employer as to how they’re to do their work.  Independent contractors generally retain control over the job that is to be done.

A clear example of an employee would be a retail store clerk who works five days a week at set hours under the supervision and control of a manager.  On the other hand, an example of an independent contractor would be a subcontractor on a building project, whose job is to install drywall.  The drywall installer generally is in control of the work to be done and, when the work is complete, the drywall installer’s job is over.  In these examples, the differences between an employee and independent contractor are reasonably clear, but in many employment situations there may be some ambiguity as to the nature of the job and employers may be tempted to classify the worker as an independent contractor.

Why would an employer want to classify a worker as an independent contractor?  In brief, because it saves the employer money and time: an employer must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee.  Depending on the employer, the employer may also offer benefits to employees that would not be available to an independent contractor.  Conversely, an independent contractor is subject to self-employment tax, which is not the employer’s responsibility and would not be entitled to other benefits offered to an employee.

Classifying employees is an incredibly tricky concept and can really benefit from the advice from someone who has done it many times before. As a business lawyer, Rick Roberts can help guide you through the process and ensure your business is set up for growth. Because this is such a tough topic to understand fully, stay tuned for part 2 of this blog coming soon.

Idaho Small Business Development: Steps to Hiring Employees and/or Independent Contractors

Many Idaho entrepreneurs starting their own business are faced with uncertainty about what is legally required when they are ready to hire their first worker, and they are concerned with the risks that come with being an employer. Following these steps will help you get on the right track, but a skilled lawyer will be able to walk you through the process and ensure that as your business grows, you are following the legal requirements for hiring and retaining employees.

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Divorce or Legal Separation; That is the Question

Getting a divorce is a very large decision. If there are kids or property involved, a divorce can really change the landscape of many lives. Therefore, legal separation might be the first step in determining if your differences are truly irreconcilable.

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Division of Assets & Property

Idaho is a community property state so if you are considering divorce, it is imperative you work with an attorney that knows the ins and outs of Idaho law. While, generally, all assets acquired during the marriage are divided equally during a divorce, there are some exceptions.

Divorce proceedings wills review all major assets including, but not limited to, real estate, sole proprietorships, legal liability corporations, retirement funds, stock options and more.  Meanwhile, a few assets are exempt from equal division:

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Dissecting Alimony, Spousal Support & More

When it comes to divorce terminology, certain phrases are thrown around and can be confusing to someone new to the process. Plus, terms are often used incorrectly in the media and press giving non-attorneys a different perspective of legal terms. Today we will differentiate some of the rulings that could occur in divorce proceedings.

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Navigating a Divorce with a Family Lawyer

A divorce is one of the most emotional decisions you will ever have to make in your life, especially when there are children involved. While the decision to divorce can be a tough one, the tough decisions are far from over at that point. Richard Roberts can help you understand your options and put together a plan of action for even the most complex situations.

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Welcome

At Roberts Law, we are dedicated to providing sophisticated legal services in a cost-effective manner to businesses and individuals. Our practice is focused on general business representation, commercial litigation and trust and estate planning. (more…)

3 Ways to Minimize Estate Planning Fees

Today, it is impossible to put together even a simple estate plan without the assistance of an experienced estate planning attorney. Why? Because estate planning laws vary greatly from state to state and these laws are extremely convoluted and constantly changing. (more…)