Employers often find themselves with a sudden need for additional temporary coverage for one or more areas of their business. Maybe a mission-critical but discrete project awaits completion: you need the labor but only through project completion. Perhaps you would like access to the institutional knowledge and professional expertise of a soon-to-retire employee once they have ceased working full-time. Your first thought might be to engage these services on an independent contractor basis.

At first blush, it seems like a winning proposition: your organization can reap the benefits of the needed labor at a cost that does not include payroll taxes, unemployment insurance premiums, overtime, office space, the tools required for the job, or other incidental expenses occasioned by a permanent employee. Independent contractors would be individually responsible for all those expenses.

Additionally, independent contractors do not have all of the legal rights of employees. Independent contractors cannot claim unpaid wages or unpaid overtime under the Fair Labor Standards Act or similar state wage payment statutes. Nor can they bring discrimination claims under Title VII or its various state and local analogues.

Even better, independent contractors can be hired for a finite duration.

But don’t let the potential cost savings blind you to the hidden liabilities of misclassifying an employee as an independent contractor. Those liabilities can be costly, cumbersome, or both, and may...

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