How to determine if you should hire employees or independent contractors
The Louisiana Workforce Commission specifies guidelines for employers regarding
hiring employees or independent contractors in Louisiana by stating that services performed by an individual for wages or under any contract of hire, written or oral, expressed or implied, shall be deemed to be employment unless the following conditions are met:
- Such individual has been and will continue to be free from any control or direction over the performance of such services both under his contract and in fact; and
- Such service is either outside the usual course of the business for which such service is performed, or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and
- Such individual is customarily engaged in an independently established trade, occupation, profession or business.
What this means is that the state presumes that a worker is an employee, not an independent contractor. That means they need to be on payroll, receive a W-2, and be covered by workers compensation and unemployment insurance.
Listed below are some key facts that might indicate the person your business is hiring is an independent contractor, and that you can pay them with a simple 1099.
Facts that Indicate a Worker is an Independent Contractor
- The individual has his own place of business separate from that of the company
- The individual provides his own equipment, supplies and facilities
- The individual pays for his own expenses for travel and entertainment, licensing and occupational permits
- The individual has other similar arrangements for the performance of services with other companies
- The individual receives payment by lump sum or contract rate rather than by an hourly or piecework basis
- The individual holds himself out to the public as available to perform similar services for others and does in fact perform such services for others
- The services are of a professional or technical nature, the details of which are outside the usual course of business and best left to the discretion of the individual
- The arrangement between the individual and the company is in the form of a written agreement which has a specific contract amount and a definite term
- The individual advertises for the performance of services
Of course, the law is not always cut and dry. So if you have any questions, reach out to an attorney, the IRS, or the Louisiana Workforce Commission. View the full guide for employers regarding hiring employees or independent contractors in Louisiana.