R. Shawn McBride recently spoke about the risk of using an independent contractor.
Recently, somebody approached me and asked, “What do I do if I have an independent contractor who may have a contract with somebody else? A prior employer?” They were concerned about the risks.
For example, a business owner was looking to hire somebody as an independent contractor who would truly be independent of her perspective– minimal control and freedom of scheduling. The independent contractor would be working their own hours, so there would be less concern about some of the traditional employee-versus-independent-contractor issues. But still, issues were there. This independent contractor had a prior employer who had a non-compete. What risk did this business owner have with this employee and the other employer?
Unfortunately, there might be risk involved because we do not know what the prior employer will do. One underlying principle in a lot of legal situations is that you cannot hire someone and force or help that someone to break another contract. Even though she is doing the right thing by possibly using this person as an independent contractor, she knows about the independent contractor having the other relationship and possibly violating the contract, so there is a possible tortious interference claim. In order to minimize those risks, we must thoroughly investigate to make sure we know what they are.
Risks come up all too often. You hire independent contractors, and you think you are safe because they are not employees and you do not have to worry about them. But that brings a reclassification risk, which we’ve talked about extensively in our blog. Additionally, you may have these kinds of risks with contract claims.
What has been your experience in using independent contractors? Have there been problems with prior employers? Let me know what questions or comments you have below.
Each case is unique. Past results do not guarantee future outcomes. This posting is intended to be a tool to familiarize readers with some of the issues discussed herein. This is not meant to be a comprehensive discussion and additional details should be discussed with your attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. Each case is unique. Past results do not guarantee future outcomes. This article should not be treated as legal advice to any person or entity. FreeImages.com/photographer John evans.
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