Can an employer terminate and rehire an employee as an independent contractor doing the same job?

 

LIKE SAVE

Probably not. For an individual to work as an independent contractor, he or she must meet certain classification requirements by both the Internal Revenue Service and the U.S. Department of Labor that demonstrate the individual is clearly working for himself or herself. If the individual continues to perform the same work in the same capacity as he or she did when employed, reclassifying the individual as a contractor will be ineffective.

One scenario where an individual may perform similar work for a former employer is if the former employee launches his or her own business (i.e., using its own resources and supplies and serving additional clients). Then, the former employer may contract that person to do some work, but the restrictions of the independent contractor relationship would apply. See SHRM's guidance on Employing Independent Contractors for more information on those requirements.

If the change is considered to avoid employment costs, such as benefits and tax expenses, and the employer intends to maintain the same level of control and provide full-time work, equipment and supplies, the worker will not meet the definition of an independent contractor.



LIKE SAVE

Job Finder

Find an HR Job Near You
Search Jobs

Discover what’s trending in HR

Search and download FREE white papers from industry experts.

Search and download FREE white papers from industry experts.

LEARN MORE

SPONSOR OFFERS

Find the Right Vendor for Your HR Needs

SHRM’s HR Vendor Directory contains over 10,000 companies

Search & Connect

HR Daily Newsletter

News, trends and analysis, as well as breaking news alerts, to help HR professionals do their jobs better each business day.
temp_image