Contractor vs employee classification in California

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Contractor vs employee classification in California

I am working as a full-time consultant for a company based in Europe. Due to the nature of the work arrangement I would be considered an employee by the IRS and my former state of residency state, and not a contractor. Due to this I had to move out of state to start my consultancy but since I am now looking to move back and I was wondering if there is a way for me to continue working as a consultant and not be classified as an employee. Since the company I work for is based in Europe, it’s impossible for them to employee me in the U.S. At the moment I am only working for one employer 40 hours a week. Would incorporating help or hiring staff and looking for new clients?

Asked on August 10, 2016 under Employment Labor Law, New York

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

An independent contractor is, as the term implies, "independent," at least to some degree. Working for only one employer 40 hours per week  is very much against you--those are indicia of being an employee. If the company also has a say in the hours you work and/or can tell you how to do your job (i.e. they don't just give you projects, etc. to do, but actively manage you to a greater or lesser degree), it will be very difficult to show you are a consultant, not an employee. Conversely, you will be in much better shape if you set your own hours and decide yourself how to complete the projects you are given.
In either case, the things you suggest would be very helpful, and while not guarantying a favorable classification, will make it considerably more likely: setting up (and doing your work through) an LLC or corporation is the single strongest thing you can do; it will also help to yourself hire staff (even part time) and to actively market yourself and look for additional clients. These are al lthings done by independent contractors. If it is important for you to be a consultant, then you should do the things you suggest.


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