Blog
Managing a Team

How To Manage Freelancers, The Legal Way

Independent contractors are the new norm, but increased restrictions make it hard to manage freelancers legally. Here's how to stay compliant.

Blog Author - Adrienne Smith
Adrienne Smith
Oct 2, 20151 minute
Blog Author - Adrienne Smith
Adrienne Smith
8 postsAuthor's posts
freelancers

Want to make sure you're correctly classifying your freelancers as such? Download our free guide.

The Risk of Bringing on Freelancers

Small businesses stand to gain a lot by engaging freelancers, but they also expose themselves to massive liability if they misclassify employees.

Although treating an employee as a freelancer seems like a minor oversight, the stakes are incredibly high for small businesses that make that mistake. To avoid facing costly litigation and tax consequences down the road, make sure you engage freelancers properly from the start.

Here are some tips to help your company stay compliant while working with independent contractors:

How To Stay Compliant with Freelancers

Work With a Variety of Freelancers

The more extensive your relationship with any single freelancer, the more likely it is that you have an employer-employee relationship.

Don’t Require Exclusivity

You want your freelancers working for a variety of clients, not just you. This minimizes the chance that they’ll be economically dependent on you.

Take a Hands-Off Approach

If you want to dictate the hours freelancers work and where, you’ll end up with an employment relationship. Remember also to avoid paying freelancers by the hour. Pay on a per-project basis is more consistent with freelance status.

Use Employees for Integral Jobs

Don't turn to freelancers for jobs that might reveal company information you wouldn't want an outsider to know. For example, don't turn to a freelancer to manage your company's budget.

Managing a Team

How to Correctly Classify Your Workers

With all the different types of workers out there, figuring out how to correctly classify yours can be confusing. This guide can help.

Download Guide

Contractually Limit the Relationship

Indefinite, permanent relationships resemble employment more than they do freelance arrangements. In your business-freelancer initial agreement, make sure you include a start and end date for the associated project.

Written contracts can help establish a freelance arrangement, but they won’t protect you completely. Using the strategies we’ve provided in our free guide can also help you stay on the right side of employment law when you manage freelancers.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.
Discover more of what you like
PEOHealth InsuranceBenefits & PerksPayroll & TaxesExpenses & FinanceEmployment LawsInternational

Check out our newsletter

Monthly tips on running a business in your inbox.

Check out our newsletter

Monthly tips on running a business in your inbox.
Written By
Blog Author - Adrienne Smith
Adrienne Smith
Oct 2, 20151 minute

Learn more with Justworks’ Resources

Scale your business and build your team — no matter which way it grows. Access the tools, perks, and resources to help you stay compliant and grow in all 50 states.