Employee or Contractor

One of the side effects of telework’s growing popularity is this issue: are your teleworkers employees or contractors? Our position from the first has been that all teleworkers should be treated like regular employees; given the same rights and privileges, fringe benefits, health care and so on. Part of our rationale for this was that, since teleworkers tended to contribute more to the ultimate “Bottom Line” than their in-office compatriots, they should be treated at least as well as the latter group. Most employers have followed this precept over the past few decades.

Employee Teleworkers

Teleworker employees for the most part fit into the situation where they are considered regular employees. They get the same benefits, health insurance, etc., as their coworkers and, since most telework part-time, have face-to-face access to their coworkers for meetings, gossip, brainstorming and other in-office activities. The only thing they miss is that wonderful(?) daily commute between home and office.

Oh, and their work schedules and routines are still largely under the control of their supervisors. But that’s the price of relative job security.

A Contractor Problem

However, in some cases greed entered the scene in real-world teleworking scenarios. The employers’ reasoning in these cases was along the lines of: “Since most of the teleworkers consider that they have been granted a privilege by our allowing them to telework, why not just pay them a little less to begin with, or give them smaller raises, than the non-teleworkers?”

This attitude then evolved into: “Wait, if we call all the teleworkers independent contractors then we’re off the hook. We won’t have to pay social security, medicare, workers comp, retirement funds and all those other irritants that increase our overhead and lower our profits!”

In fairytale land this is known as the golden egg syndrome. If you have a good deal on your hands, try to squeeze a little more out of it and wait to see what happens. Sometimes the goose croaks.

The first test of this attitude that I know about occurred when an insurance company started to treat its teleworking claims adjusters as contractors, increasing their workloads to a level significantly greater than that of their in-office employees and reducing the rates of their raises. This went on for a while until the teleworkers had had enough and sued their employer. The case was settled out of court, the teleworkers were happy with the outcome and the company changed its name. I do not know whether the contractors nee teleworkers continued to work for the what’s-its-name-corporation.

Subsequently the Internal Revenue Service and the courts have decided that: if someone (or some group of people) works for an organization and only for that organization that person (or group) is an employee (are employees) of the organization. But maybe that’s just in the U.S.

Positive Contractor Options

Some teleworkers are not entranced by the alleged charms of employee job security. In those cases the possibility of being an independent contractor is more inviting despite the potential drawbacks of needing to be in charge of all the administrivia that come with it.

Other teleworkers, particularly in the United States, yearn for greater independence but  have been put off by the hazards of finding adequate health insurance. It appears that “Obamacare” has now relieved that anxiety (assuming that none of Congress’s many attempts to repeal the ACA will be successful). Now they may be much more willing to strike out on their own — particularly those with highly marketable skills. Those teleworkers can charge fees to their clients that exceed what they would be paid if they were the clients’ employees, even including fringe benefits. For those skilled/lucky contractors life is considerably more satisfying that if they were to remain plain employees.

What next?

I’m not suggesting that all you comfortably employed teleworkers rush out and become independent contractors. Even with the increased accessibility of health care there are still the issues of running your own business. Some people are fitted for that life, others are not. But I do suggest that, if your employer is trying to force you into being an alleged independent contractor, it’s time to think seriously about a career move. Don’t wait until your employer runs up against the courts or the IRS.

In any case, the increased flexibility provided by information technology allows for a number of viable new organizational forms. You can read about some of them in my book Managing Telework.

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