Michigan Employment Compliance

Many would-be Michigan employers opt for utilizing temporary employees through agencies or hiring independent contractors or consultants instead of growing their own workforce.  Even though this might be the easiest choice initially, employing workers directly in Michigan has benefits that should be considered, too.

Below is a summary of the benefits of hiring Michigan employees that is by no means all-inclusive.  It simply highlights a few issues that a company or sole proprietorship typically faces when making the decision whether to hire employees directly or to use contractors or temporary employees instead.  If your business has never hired an employee, it is always good to schedule a meeting with your attorney and accountant to review the tax and compliance implications as they affect your individual business.

Advantages of Being a Michigan Employer

With all the compliance and other issues that arise with hiring a Michigan employee, some businesses state that there is no way they would ever want to hire an employee and opt instead for consultants, independent contractors, and temporary employees.  The reality is, some of the real advantages listed below are often overlooked to the detriment of those companies.

1. Retaining control – Many Independent Contractors choose to work in this capacity to have the freedom to carry out the tasks/projects assigned to them when and where they want.  You in turn, have less control to supervise and monitor their work as you would with employees.  If you get too involved with an Independent Contractor’s project and how they are working, you risk making the Independent Contractor look like an employee and may have to reclassify them as such.  The law then says you should be back paying payroll taxes, workers compensation, unemployment insurance, etc.
2. Continuity / consistency – Since many projects/assignments may be short-term in nature, temporary workers, consultants, and independent contractors may come and go frequently and be unavailable for the next project. This could cause some disruption within your company may result in cause inconsistencies in the quality of work produced by your business.  Customers who cannot rely on the consistency of your output may look elsewhere.
3. Right to terminate on your terms – The right to fire an Independent Contractor depends greatly on the Independent Contractor Agreement that was written up and signed before the assignment began.  Some agreements provide for continuing revenue in the form of commissions after termination or require that a termination be only “for cause.”  Other agreements have no requirements that the independent contractor leave behind their designs, plans, or other work product necessary for a new contractor to take over the job.  An experienced attorney, like Shawn Eyestone at Eyestone Law Offices, PLC can help you write-up an agreement that makes the most sense for both parties and preserves some of this, but many times an employee would better suit your company if termination and ownership of your intellectual property are key.
4. Liability for injuries sustained on the job – Worker’s Compensation Insurance insulates companies from lawsuits by their employees.  An Independent Contractor or temporary worker is not covered by your Worker’s Compensation Insurance and may be able to sue your company to recover damages if he or she is hurt while working for you or someone employed by you damages the independent contractor’s equipment.
5. Owning your copyrights, trademarks, patents, or other intellectual property – Employers typically own the rights to intellectual property created by employees in the course of their employment without further documentation.  As an Independent Contractor performs design work, writes articles or takes photographs (or creates anything that can be protected intellectual property), they may own the rights to that work making it very difficult for you to keep those rights.  Worse yet, these rights may be reused and resold to your competitors, eliminating whatever edge you might have gained.
6. Government audits – If you decide to hire Independent Contractors instead of employees, the government may want to step in and take a look at your operation. They may want to ensure that you are utilizing this classification properly and not simply avoiding employment compliance obligations, such as FICA taxes, Worker’s Compensation Insurance, Unemployment Insurance, and all the employment anti-discrimination laws.

Hiring a Michigan Employee

Now that you have read over my six of the benefits of hiring a Michigan employee blog, you may have further questions about whether it is right for your business.  For further help in determining the steps for hiring an employee without violating employment laws, call or email Attorney Shawn Eyestone to schedule a free consultation.