Introduction
Make-a-Bed was searching for an opportunity to streamline its processes so that the related manufacturing expense could be reduced. In the process, John Engineer was hired to control the associated activities. Although it was originally considered that the company was going to hire an employee, it was later on decided that the entrepreneurship would benefit more from using John’s services as an independent contractor.
After John filed a claim against the company so that it could provide him with the payment that he considered himself eligible for, an error in the firm’s database that led to him being included in the payroll system was discovered. However, outside of the identified misunderstanding, none of John’s responsibilities implied that he worked as a company employee. Therefore, the motion should be denied as a case of misunderstanding with no fault on the company’s side whatsoever.
Case Analysis: The Legal Proof to Support the Claim
According to the IRS Publication 15-A, Section 2, a hired employee is restricted in their choices of “when and where to work” (Internal Revenue Service, 2016) as well as the order and sequence of the actions to carry out. John, however, was provided with much more flexibility, according to the details of the case.
Furthermore, the fact that there was no behavioral control over John’s actions whatsoever indicates that John’s status was not that of an employee but of an independent contractor. Indeed, casting a second glance at the case, one will be able to notice that there was a significant amount of freedom in decision-making provided to the plaintiff (Megerdomian, n. d.).
It could be argued that the necessity for John to submit regular reports about his activities, which was a part of the corporate policy that was made an essential element of the communication between the contractor and the company’s president, could be mistaken for being hired as a full-time working member of the organization. However, according to the 11-factor test provided by the IRS, the issue regarding reporting is not mentioned among the crucial characteristics of the relationships between an employee and the employer (Internal Revenue Service, n. d.).
Similarly, the issue regarding the time control that John brought up during the hearing might be interpreted as an attempt by the organization to exert their power to control him. In addition, the fact that John was only allowed to work during business hours could be considered proof of him being legally employed full time. However, the fact of the matter was that the company’s computers were only available in the identified time slot. Similarly, the technical manuals could only be viewed during business hours. The rest of the work-related processes, however, could be accomplished at any time that the contractor found desirable (State of Oregon, 2016).
The financial issue could cause certain misunderstandings, which is quite understandable given the employee’s status. According to the existing regulations, the payment issued on an hourly basis is the traditional practice. However, there was an error in the system database, which caused John to be listed in the employer payroll system.
Conclusion: Dotting the “I’s”
Summary
The case in point is a graphic example of a misunderstanding between a contractor and a hiring company. Although the organization was initially seeking an employee, the job position was later changed. When John, the plaintiff, applied for the position, it no longer implied that the candidate was going to be hired as a member of the organization. Nevertheless, John applied and received the appropriate support from the firm. Giving him freedom in choosing the areas to work in, the organization offered John the full extent of the opportunities that a contractor is entitled to when working for an organization.
The payment issue, which could be viewed as the proof of John having been hired by the company as a full-time employee, occurred due to a system error, and the company members, including the finance department team, had been completely unaware of the mistake until it was brought up by the plaintiff.
Based on the evidence provided above, there are substantial reasons to claim that John was hired as an independent contractor and not an employee. In light of the statement above, Make-a-Bed is not obligated to deliver unemployment benefits to the claimant. Therefore, the company insists that John is not eligible for the employee benefits.
The fact that the contractor submitted regular reports regarding his location and the time that he would be available cannot be viewed as proof of him being hired as a full-fledged employee since the contract details did not state that the specified reports were required. Therefore, claiming that the company demanded the reports from the contractor would be wrong.
Recommendations
Even though the case is quite clear, and it is evident that the organization did not hire John, the misunderstanding is quite unfortunate and, therefore, has to be avoided in the future. To create an environment in which the role and responsibilities of both the contractors and the company could be clear to all parties involved, the organization will have to be very articulate in stating the conditions. In other words, the candidate must be made aware of the fact that they are being hired as a contractor.
Furthermore, it is essential that the company should keep the corresponding papers in order. Keeping printed and signed papers, as well as copies thereof, must be part and parcel of the hiring process. Thus, the required evidence can be provided to the person hired for a particular position so that the issue can be resolved without the assistance of a civil trial (Reibstein, Petkun, & Rudolph, 2015).
Finally, complete clarity in the communication process will be necessary to avoid any possible misunderstandings. The extent to which the company controls the actions of the person hired for the job must be stated in writing and made available to the contractor so that all issues can be clarified before the contractor starts working for the company. Furthermore, the papers will be of crucial significance in case of a misconception, such as the one in the case in point. By enhancing the process of communication and improving the information management strategy, the company will be able to avoid similar misconceptions in the future. Similarly, the financial system efficacy, especially as far as the automation of the payment process is concerned, must be checked on a regular basis so that the corresponding problems can be managed at the earliest stages of their development. Thus, errors such as the inclusion of a contractor into the payroll system can be easily avoided (Tran, 2016).
References
Internal Revenue Service. (n. d.). Appendix D. Independent contractor test. Web.
Internal Revenue Service. (2016). Publication 15-A: Employer’s supplemental tax guide. Washington, DC: Department of the Treasury.
Megerdomian, L. (n. d.). Distinguishing independent contractors and employees. Web.
Reibstein, R. J., Petkun, L. B., & Rudolph, A. J. (2015). The 2015 white paper on independent contractor misclassification: How companies can minimize the risks. Philadelphia, PA: Pepper Hamilton LLP.
State of Oregon. (2016). IRS 20 factor test – Independent contractor or employee?Web.
Tran, P. (2016). The misclassification of employees and California’s latest confusion regarding who is an employee or an independent contractor. Santa Clara Law Review, 56(3), 678-702.