R. Shawn McBride recently spoke about the risk of using an independent contractor. Here is the full transcript:
Hi there. R. Shawn McBride live from Orlando, Florida. If you’re listening in today, I’d love to know where you are and who’s listening in, so drop your name and say hello. Tell me where you’re from and what topics might be of interest to you in the future. Today, I want to talk about independent contractors, specifically using them when they may have a contractual tie to somebody else. Recently I was speaking at an event, somebody approached me and asked me, “What do I do if I have an independent contractor that may have a contract with somebody else? A prior employer?” They were concerned about what the risks were. We want to dive into that a little bit.
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Let’s jump into the issue a little bit. A lady had a situation where she was a business owner, and was looking to prospectively hire somebody as an independent contractor who was truly going to be an independent contractor from her perspective — minimal control, freedom of stability and scheduling, the independent contractor would be working their hours, so a little less concerned about some of the traditional employee-versus-independent-contractor issues. But still, issues were there. The bigger issue was this independent contractor had a prior employer who had a non-compete. The question was what risk did this business owner have with this employee and the other employer?
Unfortunately, we had a situation where there might be risk involved because we don’t know what that prior employer is going to do. One underlying principle in a lot of legal situations is that you can’t hire somebody, you can’t force somebody or help somebody break another contract. We might have a tortious interference with contract claim here. Even though she was doing the right thing — possibly using this person as an independent contractor, that should have been fine, since she’s in-the-know about the independent contractor having the other relationship and possibly violating that contract — there’s a possible tortious interference claim. We want to make sure that we minimize those risks. Really investigate, understand what’s going on, make sure we know what the risks are.
Something comes up all too often. You hire independent contractors, you think you’re scot-free because they’re not employees, you don’t have to worry about them. But that reclassification risk, which we’ve talked about extensively in our blog, but additionally you also have these kind of risks with contract claims coming along.
Hopefully, I answered some of the questions, I’d love to know what else you want to talk about. Follow this page if you’re not already a fan, the R. Shawn McBride public page. We want to make sure we’re getting this word out to people and helping them.
I can’t give you specific legal advice over this medium, but I want to give you some idea of some of the issues you should be looking for if you’re working with employees. And feel free to reach out to me. Let me know what questions you have. We’d love to address them in future sessions. Please e-mail questions into the R. Shawn McBride public page, let us know what you want to hear, have your friends join in, let us know what they want to hear, and we’ll help build this community and get more people in-the-know.
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. This article should not be treated as legal advice to any person or entity. Each case is unique. Past results do not guarantee future outcomes. Freeimages.com/photographer Odan Jaeger.
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