People Processes

In this six-part series, we take a look at employee classification. When looking to hire for your business, it’s important to look at whether you’ll be taking on an independent contractor or a traditional employee. You’ll also need to decide whether the job is going to be FLSA Exempt or nonexempt and, finally, whether you’re hiring for a full-time or part-time position. In Part 1, we discuss why people misclassify employees and outline the ways we distinguish between employees and independent contractors. Why is employee classification important? Consider this: Depending on the state, 10% to 20% of employers misclassify at least one employee, which has huge financial repercussions and is the most likely Department of Labor complaint a small business will face. Independent contractors (not to be confused with employees under contract) are employees who have contractual agreements to complete jobs and have complete control over their job performance. They reduce human resources, payroll, bookkeeping expenses as