Scenario Summary: Week 1
Your role is to decide if Karen is an independent contractor or an employee and discuss some of the preventative and ethical situations that are occurring in this case.
1. Do you feel that Karen is an independent contractor or an employee? What is your rationale for this decision?
I believe that Karen is an independent contractor. She was never hired by ABC Utility as a permanent employee. Karen’s tittle was change twice; she had a tittle of a temporary employee and Human Resources Consultant. My rationale for my decision is based on the fact that Karen has been working for ABC Utility for the past five year as an independent contractor and has never received any benefits and was paid as a 1099. Karen was never in need for any kind of benefits prior to her husband's death. After Karen’s husband death, she finds herself in need to have benefits.
3. What factors favor her being a contractor?
One of the factors that favor Karen of being a contractor is that she also works for other clients that keep her on a retainer along with those who she's worked with throughout the years as an independent consultant. This allows for the ability to multiple income streams. As an independent contractor, see can set her own work schedule, pace, and the amount of work done at a time, as long as she meets the requirements from her customers.. The fact that Karen was married at the time made the option easy for her to stay as a consultant and use her husband benefits.
4. What are some potential legal implications in the case? What should the utility do to rectify any wrongs in this situation?
Some potential legal implications that I can see in this case is that ABC Utility never offered Karen any benefits when she was hired. ABC Utility should have offered her a full benefit package after a trial period and leaving the decision up to her as to whether she wanted to become an employee of ABC Utility or stay as a consultant. ABC Utility should offer to extend some benefits to her if she is qualified to work as a permanent employee and if the company has a current need to have someone on staff on a full time permanent basis. The decision to make Karen a permanent employee must be carefully reviewed by the human resource department.
5. Draft a sample policy for limiting the use of independent contractors that will help avoid issues like this in the future.
Sample Policy Limiting Use of Independent Contractors
1. Have a consultant sign a form indicating that they will be working for the company for a specific period of time and also specified the conditions they will be working on.
2. Offer and extend option to purchase benefits with the company and explain at what rate. Explaining very clear the conditions of those benefits as for example rates as an employee vs a temp or consultant.
3. Any decision to hire an outside consultant on a permanent basis is subject to evaluation, testing and qualifications needed at the time of job opening with all hiring specifications being met