Independent Contractor Primer
The use of independent contractors is a common practice in the retail and commercial flooring industry. Yet, few areas of business have caused more confusion and problems than determining who qualifies as an independent contractor. A dealer may follow all the rules established by the Internal Revenue Service only to be audited by its state’s Workers’ Compensation Commission and told its independent contractors are in fact employees. It is also not uncommon for a dealer to implement all the requirements from the Workers’ Compensation audit, but be told its independent contractors, who were paid under piecework rates, must be treated as employees and must be paid back overtime compensation. There is also always the threat that a terminated independent contractor will file for unemployment insurance or seek back overtime pay claiming he or she was in fact an employee, notwithstanding a contract that explicitly states that they were independent contractors.
Contracts—Cannot Live Without Them
For better or for worse, contracts are needed in today’s society for even the most routine transactions. This is especially true for flooring dealers, who enter into any number of contracts each week, from purchasing products from manufacturers and distributors, to selling products to customers, to purchasing advertising, to subcontracting with general contractors and installers, to leasing equipment and property. A contract can be as simple as an order form, an acceptance letter or e-mail, or it may be a detailed multi-page agreement. Regardless of the format, contracts define the rights and obligations of the parties, and control what products or services must be provided, the time and type of performance expected, the terms of payment, and the liabilities and responsibilities of each party. Failure to understand the consequences of these agreements and forms can subject the flooring dealer to unnecessary disputes and liability.