(From the editors: This one is a hot one. Opinions vary. EmployerNomics agrees with the HR Support Center on this one. Some will argue that if you hadn’t processed the employee yet you can pay them as a contractor, but we would argue that you are already in jeopardy by allowing someone to work without processing them. Just think what would happen if they got hurt and filed a workers’ comp claim, for example.
Question:
“A newly-hired employee quit after their first day. To keep things simple, can we just pay them as an independent contractor?”
Answer from Kim, SPHR, SHRM-SCP:
“No, that approach is not compliant with regulations. The IRS, the U.S. Department of Labor, and state agencies have specific criteria for determining who is an employee and who is an independent contractor. These criteria focus on the overall relationship workers have with their employer, with attention to who controls when, where, and how the job gets done, along with who has the opportunity for financial profit or loss. The time span of employment is not one of those criteria. We therefore recommend that you pay the employee the day’s wages through your payroll system, taking out payroll taxes and other withholdings as required.”
About Kim
Kim is a results-driven HR Professional with experience from diverse industries, including but not limited to, transportation, environmental services, staffing, pharmaceutical, market research, banking, retail, software development and education non-profit. In her spare time, Kim enjoys the beautiful view from her home and being with her husband and their German shepherd, Fin.
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