Independent Contractors For Global Organizations

As the global market grows seemingly smaller, more and more companies are expanding their reach around the world. Some companies send U.S. employees overseas, while others hire locally, or even utilize local independent contractors. As in the United States, companies must be mindful of the risks involved when hiring independent contractors in their international operations.

While different countries have different levels of scrutiny when it comes to determining who is an independent contractor and who is an employee, many of the principles remain the same. The main questions deal with the company's control over the person's work. Thus, if you are considering hiring independent contractors overseas, or already do, these are some questions to consider:

Does the company control what the worker does or how the worker goes about completing a task? If the company controls when and where the work is done, what tools or equipment to use, what order or sequence to follow in completing a task, then this may indicate that the business has a right to direct and control how the worker does the task and may implicate an employee-employer relationship instead of an independent contractor relationship. An independent contractor typically controls where, when, and how they work. Does the company provide training to the worker? Independent contractors typically use their methods to complete a project. Thus, if a worker must be trained to perform the work in a particular manner, this may indicate an employer-employee relationship. Does the worker provide services to other clients? If the worker exclusively works for the company, this is a strong indicator that there is an employer-employee relationship. If the worker provides services for the company on a full-time basis on a continuing basis, they may be deemed an employee. Also, if the worker is required to enter into some form of non-competition agreement with the company and is forbidden to work for other companies, this will further implicate an employer-employee relationship. Does the worker control his/her opportunity for profit and loss? An independent contractor typically invests in his/her own supplies, tools, equipment, and determines the manner in which the work is done. If the company pays the worker on a project basis, then the independent contractor maximizes his/her profit by working efficiently and controlling costs. Further, the independent contractor's earnings are not limited to and...