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

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 and Other Gig Workers 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.


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