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Essay Independent Contractor or Employee?

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1.Do you feel that Karen is an independent contractor or an employee? What is your rationale for this decision? The differentiation between an independent contractor and an employee is a critical one for any employer to make. Furthermore, this choice can have significant implications for the business regarding additional fees and taxes. In this situation, Karen was initially hired as a temporary employee. Moreover, Karen has functioned as an independent contractor for 5 years. If one were to look at her employment status, they would see that Karen has additional clients outside of the local utility as well as the fact that she has not received benefits or proper tax documentation for this period time. For these reasons, Karen should …show more content…

Furthermore, if no employer-employee relationship exists (regardless of what the relationship is called), you are an independent contractor and Karen’s earnings are generally subject to Medicare and Social Security Taxes for Self-Employed (IRS, 2011). In any event, this is a very interesting question for all involved. Despite the fact that Karen was hired as a consultant acting independently of the utility, she has been working within a relationship with the employer for a long period of time. 4.What are some potential legal implications in the case? What should the utility do to rectify any wrongs in this situation? Challenges for the employer and the situation include the issues related to government taxes such as Medicare and Social Security. In addition, the employer is bound to pay reasonable benefits to all of its employees equally. If the utility does not do this, and it is determined that Karen is an employee of the utility, and Karen is a legitimate case against the utility to recover the lost benefits. To rectify this situation, the utility should clarify exactly what Karen’s individual situation is, and hopefully with the help of a tax advisor. The advisor may suggest that Karen's work responsibilities be clearly delineated and that she be afforded the requisite benefits. Lastly, all necessary taxes, including payroll amounts for charges such as Medicare and Social Security need to be paid in full. 5.Draft a sample policy for

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