Fee for Service

Bullion

We are a non-profit organization who purchased 3 vans. These vans will be used to transport clients to trainings, doctor appts, meetings with their Case Managers etc. We want the drivers to submit invoices as "fee for services". We do not want to employ the drivers. Their services will be on an as needed basis. What are the legal ramifications?

ACU Frank

I don't mean to be flippant, but that's probably something you should have nailed down before buying the vans!

joannie

[quote=Bullion;717789]We are a non-profit organization who purchased 3 vans. These vans will be used to transport clients to trainings, doctor appts, meetings with their Case Managers etc. We want the drivers to submit invoices as "fee for services". We do not want to employ the drivers. Their services will be on an as needed basis. What are the legal ramifications?[/quote]

I think you have an issue. Fee for service would indicate independent contractor status. I don't believe the drivers would qualify as independent contractors as you are providing the "tools" they are using. Also, I'm surprised you do not have an issue with your insurance company. We are required to provide MVR's on all employees driving company vehicles. IMO, what you have are part-time employees who are on an on-call basis.

Holly Jones

As Frank and Joannie have so astutely pointed out, the purchase of the vans is quite a hurdle for asserting independent contractor status for these workers. Fortunately there is no one determinative factor for independent contractor status, but requiring a worker to provide and maintain his/her own tools is one of the simpler tests of independent contractor status for employers to meet.

While I couldn't say definitively whether you would be able to tailor this situation to create a good-faith independent contractor relationship (also, be aware that there are some state independent contractor laws, too, so you'll need to look into any specifics in your state(s) of operation), I can provide a bit more information on some of the other tests for independent status. With the current situation, you would have to show that these workers have a significant amount of control over their services rendered, that the services are not integral to your business operations, that some measure of skill is required of the workers, that the relationship is not one of permanency, that the worker has some opportunity for profit and loss, etc. Further, while it's always a good step to have contractual documentation that the relationship is meant to be an independent contractor status, that contract alone -- even if the worker assents to it -- will not be controlling.

[url=http://www.dol.gov/esa/whd/regs/compliance/whdfs13.pdf]This Fact Sheet from the DOL[/url] and our free HRHero Hot Topic page [url=http://www.hrhero.com/topics/independent_contractors.html] on Indepedent Contractors [/url] both cover the basics very nicely. (We also offer a number of products for purchase that go more in depth, including our [url=http://www.hrhero.com/special_reports/OT.shtml?M818]Overtime Ins and Outs Special Report,[/url] our [url=http://www.hrhero.com/wagehour/?HLA]Wage and Hour Manual,[/url] and our [url=http://www.hrhero.com/manuals/catastrophes/AuditWorkbook.shtml?TOPIC]Self-Audit Workbook.[/url])

Keep in mind that independent contractor status is not just an issue of wage and hour law. It also carries workers compensation implications, OSHA implications, benefits implications, IRS implications, state and federal unemployment implications, etc. The IRS [url=http://business.uschamber.com/p07/p07_1115.asp]"20-factor test"[/url] is another good tool for assessing an independent contractor vs. employee relationship.